Originally published inĚýCarroll Capital, the print publication of the Carroll School of Management at Boston College.Ěý
“Andrew and I usually have opposing views—he is conservative, and I’m more liberal,” saysĚýAlicia Munnell, director of, speaking ofĚý, an American Enterprise Institute senior fellow. In 2017,ĚýThe Wall Street JournalĚýhighlighted their differences under the headline, “Is There Really a Retirement-Savings Crisis?” Biggs argued there wasn’t a crisis, while Munnell said there was.Ěý
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Now, the two retirement experts are combining forces. Earlier this year, the center published a proposal by Munnell and Biggs titledĚý”ĚýIn it, they make a bold statement: “The case is strong for eliminating the current tax expenditures on retirement plans, and using the increase in tax revenues to address Social Security’s long-term financing shortfall.”
Tax deductions for contributions to retirement plans primarily benefit high earners while failing to boost national savings significantly, according to theĚýresearch. They suggest that if the federal government eliminated tax benefits for 401(k)s/IRAs, it would collect an additional $185 billion in tax revenue. That would help shore up Social Security, which will be unable to pay full benefits in about 10 years without any policy changes.
The proposal drew extensive media coverage, which didn’t surprise Munnell, who is cited regularly in The New York Times, The Wall Street Journal, and other outlets. She and her team were a little stunned, though, by the volume of often-heated reactions on social media. “The goal of the brief wasn’t to create controversy, or to get Congress to take immediate action,” says Munnell, who is the Peter F. Drucker Chair of Management Sciences. “We wanted to start a dialogue.”
Some critics argued that employers would have less interest in offering the plans if their workers were to lose the tax benefit. On this point, critics might have missed the fine print: The proposal also calls for a federal mandate that all employers must either provide a plan of their own or contribute to a national fund for that purpose. With or without this particular plan to fix Social Security’s shortfall, Munnell’s end goal is clear: “I want people to be able to live in dignity after they’ve spent their entire lives working.”
