Despite spending $100 billion a year in retirement tax breaks, the U.S. faces a retirement income security crisis. Though federal tax breaks for 401(k) plans and IRA plans are known to be ineffective and regressive, until now no one has documented the nearly $20 billion states spend on the same ineffective tax breaks. If federal and state tax deferrals for retirement accounts were transformed to refundable tax credits and deposited into Guaranteed Retirement Accounts, every worker would have an average of over $647 per year in retirement savings from the federal government, with an additional $172 going to those who live in states with income taxes.
Authors: Teresa Ghilarducci, Bridget Fisher, Ismael Cid-Martinez and Joelle Saad-Lessler
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