On Monday, President Donald Trump has dismissed the possibility of restraining tax-deferred U.S. retirement saving plan to help pay for sweeping tax cut and has shown some signs of adding another top bracket targeting the wealthiest Americans.
The 401 (k) planks has helped many Americans save for retirement for four decades and its potential drawbacks is among the several crucial aspects that still have to be worked out in a major tax overhaul that Trump has promised as a candidate. He also wants the fellow Republicans who are in control of Congress to pass by year’s end.
In order to generate revenue which was lost as a result of the proposed tax cuts, The White House and its allies in Congress have just given out the idea of paring back a number of tax deductions.
The Wall Street Journal and New York Times also reported on Friday, “Republicans were considering an annual cap of about $2,400 on pre-tax contributions to 401(k) plans, roughly 13 percent of what workers under age 50 currently can contribute on a tax-deferred basis.”
In a tweet on twitter, Trump said, “There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!”
The interference with 401 (k) plans has, on a large scale replaced the defined benefit pensions in United States and it would estrange millions of U.S. workers as well as Wall Street that generates the fees from managing these plans.
The Democrats who have also painted the Trump’s plan with the whopping $6 Trillion in tax cuts will be provided with ammunition just as a gift to the rich and corporate America and it would certainly balloon federal deficit.
Also, in an interview that was broadcasted on Fox Business Network on Monday, Trump pour cold water to the idea.
New Tax Bracket
There are some possible signs that Republicans would probably add a fourth income tax bracket that would affect high earners to tax blueprint. This will envision collapsing the number of brackets to three from the current seven.
This idea of additional top tax bracket was given by Republican House of Representatives Speaker Paul Ryan.
He said, “It may not happen. The only reason I would have (it) … is if for any reason I feel the middle class is not being properly taken care of.”
There is also a pressure from the investors to pass tax overhaul.
Trump also said that he would press the Republican lawmakers to act on taxes and that he thinks there are enough votes to pass the plan. While its broad parameters have been made public, the detailed legislation has not yet been unveiled.
Senate Majority Leader Mitch McConnell, speaking to CNN on Sunday, would not say whether he would back retirement fund caps, saying it was “way too early to predict the various details.”
Also, on Tuesday, Trump is most likely to participate in weekly policy lunch of Senate Republicans and he has recently spoken with House Republican lawmakers on Sunday, the White House said.