Friday, May 12, 2006

Robbing Peter

Kevin Drum points out the latest reason not to trust Republicans with your money. Basically, by allowing people to pay taxes on their IRA contributions now instead of at retirement (by converting traditional IRAs to Roth IRAs), the tax bill gets a short-term revenue enhancement, but long term it pushes us further into debt. The transition between short-term and long-term is conveniently located at the boundary between what gets routinely published (5 year projections) and what doesn't.

This isn't good tax policy, and probably isn't even good policy. I'd expect most people to earn less in retirement than while employed and contributing to their IRA, so it's better to pay taxes while they're retired than while they have higher earnings and a higher tax rate. This is Enron style accounting. Playing accounting tricks to keep money on the books that doesn't exist just to sustain the value of our foreign debt endangers all of our futures.