"Debating the Impact of Retirement Tax Breaks on Social Security"

Economists argue that the federal government should stop subsidizing pre-tax contributions to retirement savings accounts, suggesting that the nearly $200 billion lost in tax dollars could be redirected to shore up the underfunded Social Security program. They claim that tax-favored retirement accounts largely benefit the wealthy and have not significantly increased overall saving. However, the financial industry argues that tax-favored retirement plans provide a dignified retirement for lower- and middle-income Americans and that abolishing the tax subsidies would hurt the middle class. While there is little chance of immediate repeal, the economists propose modifying the subsidies to reward responsible saving without lavishing tax breaks on the wealthy.