Think Tank Says Proposed Pension Changes Would 'Overwhelmingly' Benefi

[Dave Baker]

Excerpt: "Tax legislation to be considered by the House Ways and Means Committee this week would substantially expand pension tax preferences for high-income executives but likely lead to some reductions in pension coverage among low- and moderate-income workers and employees of small businesses. The pension provisions, which are similar to those included in the large tax bill that President Clinton vetoed last summer, would primarily benefit high-income individuals."

http://www.cbpp.org/7-12-00tax.htm

Do you agree?

[Guest Franklin Evans]

I read the first few paragraphs of the cited webpage, and skimmed the rest. I would like to warn the reader of this webpage that "creative statistics" is an important grain of salt to keep handy whenever conclusions are drawn from statistical analysis, especially when politics are involved.

The core intent of any qualified pension program in the private sector is to maximize the income for the top level of the company sponsoring the program. This is less cynical than it appears: executive compensation has always been geared to rewarding and keeping successful managers. ERISA put a stop to the more obvious abuses to the pensions system, but the "top-heavy" nature of most plans has not changed all that much in 26 years.

I've mentioned this before, cynically, but the other component bears repeating: pension contributions are tax deductible. This is the important corollary to the executive compensation formula, the ability to shift tax liability to deferred compensation.

The most important point made, in my opinion, is that little if any new savings will be generated by this proposal. Industry experience and US savings behavior definitely support this assertion.