CBO Puts a Figure on Tax Revenue Impact of Retirement Distributions
The point has often been made that retirement plan tax “preferences” are a deferral of taxes, not a deduction — and now the Congressional Budget Office (CBO) has estimated that impact on the nation’s Gross Domestic Product (GDP).
The CBO’s “The Budget and Economic Outlook: 2016 to 2026
” acknowledges that “taxable distributions from tax-deferred retirement accounts will tend to grow more rapidly than GDP” and notes that, under current law, Boomers’ withdrawals from tax-deferred retirement accounts will be enough to boost tax receipts as a share of the economy by 0.2 percentage points over the next decade.
While that will certainly help government revenues, it’s likely small comfort to those worried about the likely financial impact of all those retiring Boomers on the financial status of Social Security and Medicare.