Matt Bruenig published this piece at Politico today about the retirement system.
Three excerpts:
According to the Congressional Budget Office, the richest fifth of Americans receive 58.1 percent of all the government subsidies provided to DBs, DCs and IRAs while the poorest fifth receive just 1.3 percent. Even the middle fifth receives only 10.5 percent of the subsidies, about half of what they would receive if the money were distributed evenly. This year, the poorest fifth of the population will receive around $5 billion of the $371 billion of federal tax breaks allocated to these programs. The middle fifth will receive around $39 billion, while the richest fifth will receive a whopping $215 billion.
DBs, DCs and IRAs also provide significant amounts of fee revenue to Wall Street banks and other financial intermediaries who administer the tens of millions of individual accounts and pension funds. This aspect of the system periodically generates outrage when research is released showing that many financial institutions are basically scamming their account holders with shockingly high management fees. But when it comes to the debate about old-age programs, this gusher of cash for the financial sector no doubt helps to explain why these programs are never targeted, while Social Security, which provides no money to the financial industry, is always in the crosshairs.
For example, the most talked-about proposal for cutting Social Security right now is focused on gradually raising the full retirement age to 70 years old. The CBO says that this would save $121 billion between 2024 and 2032. However, a similar amount of savings could be achieved by applying an annual 0.03 percent tax on the $34.5 trillion of assets held by DBs, DCs and IRAs. Such a tax could be directly collected and remitted by the financial institutions that manage these accounts without changing anything at all about the tax-filing obligations of individuals. For a person with a $100,000 IRA, the tax would amount to just $30 per year.