By focusing on prohibiting Romney-sized accounts, the plan diverts attention from encouraging lower-income workers to save more, said Alicia Munnell, who directs the Center for Retirement Research. Tax benefits for retirement savings should be limited for the rich, and a cap isn’t the right approach, she said.
“What does the administration think they’re solving?” she said. “I spend all my time trying to get people to save more. The only person I’ve seen who seems to have more than they need is Mitt Romney.”
The administration is seeking to encourage Americans to save as much as possible, Treasury Secretary Jacob J. Lew said at an April 11 House Ways and Means Committee hearing.
“Tax incentives have to be looked at in the context of the tradeoffs,” he said.
The cap would probably affect well-off professionals such as lawyers and doctors, while the ultra-rich would find ways to avoid it, Munnell said. Tax shelters mean that a cap devised to prohibit Romney-sized accounts may mostly end up hitting those with far fewer resources.
“What Obama is doing here is throwing the baby out with the bath water,” Rubin said. “The ultra-affluent community is very nimble.”