Slouching Towards a Consumption Tax and the End of Retirement Income Security

In 2003, the Bush Administration proposed two ideas I that I (and others) feared would undermine the retirement income security of millions of Americans. The first idea was to create two new tax-favored personal savings vehicles: the retirement savings account and the lifetime savings account. The second new idea advanced by the White House in 2003 was the exclusion of stock dividends from taxation.This article proceeds as follows: the section immediately below provides an overview of the current employment-based retirement system, followed by a section describing the White House tax proposals as initially proposed in 2003, as modified in subsequent White House Budget proposals, and as again modified by the President's Advisory Panel on Federal Tax Reform. The next section describes the ways in which the proposals (or similar proposals) would, if enacted, undercut the retirement income security of many working Americans. The succeeding section provides a reflection on the ideological underpinnings of the White House proposal. The final section, using the ERSA proposal as a starting place, provides some ideas to improve the ability of working people to prepare for retirement through incremental reforms to the current system. The final section also briefly discusses the shape that fundamental reform should take if we are to abandon the current employer-based system - which would likely be the effective result of a serious move toward a consumption tax - in favor of new ways to create retirement income security for American working people