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Comment by kspaans | Hacker News Reader

$5,500 per year, presumably for many years. And heaven forbid you should be so well off that you have to save for retirement with after-tax dollars and/or in taxable accounts! :P

Tax-advantaged savings accounts are to reward savers who might not otherwise save. They don't mean that everyone deserves tax-free saving.

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While someone living in Dallas would see $200k as being very well off, think about a couple who lives in San Fran, or New York. 100k each is not truly 'well off' in those cities, so they are unfairly punished if they wanted to contribute what little money they have after living expenses to a roth.

Yes, another reason to move to taxing consumption rather than income.

However I don't care where you live, if you are earning $200K in a household you can afford to save.

We have to have a variety of tax bases (consumption, income, property.) Otherwise those with income/assets in excess of $500k can easily move money around to avoid paying a similar share to people who are less well-off.

Except that consumption based taxes encourage wealth hoarding, and are extremely regressive for families that spend most or all of their income. A better format would be a "average middle class household cost of living" adjustment.

>And heaven forbid you should be so well off that you have to save for retirement with after-tax dollars and/or in taxable accounts!

Well, this is where the distortion comes in. The employer uses pre-tax money when funding pensions. The employee doesn't have the ability to do this. It's the same situation with other benefits.

So it's optimal to take a lower salary and more benefits. But this is strictly worse than if the taxation regime was the same for both employees and employers.

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