>> President Donald Trump said on Monday that his tax overhaul will not affect retirement savings. Trying to ease the minds of voters as Republicans look for ways to pay for their promised tax cuts. I'm Andy Sullivan in Washington, where Trump has popped a trial balloon floated by his fellow Republicans in Congress last week.
Suggesting that Americans be taxed upfront for the money that they set aside for their golden years. That drew a fierce response from Wall Street and retirees. It's a vivid example of the delicate balancing act that they face as they try to simplify the American tax code, all 70,000 pages of it, by lowering rates and closing loopholes.
The problem is that many of these loopholes have been shaping the American economy for decades. So getting rid of them or even tweaking them is extremely difficult as we're seeing now. Americans currently can set aside up to $18,000 per year for retirement without paying taxes. Even more for those over 50.
Republicans had reportedly considered a plan that would reduce that figure to as low as $2,400 per year. Workers would have to pay tax on any savings above that figure. The benefit currently costs the US government about $115 billion in lost revenue this year. Republicans hoping to use that money to offset planned tax cuts for businesses.
Democrats, economists, and financial companies like Fidelity Investments blasted the idea as short sighted. Saying it could discourage saving and cost money down the road. Trump killed the idea on Monday, calling the benefit on Twitter a quote, great and popular middle class tax break that works. Trump's mounting a full court press here.
He's traveling up to Capital Hill on Tuesday to talk with Senate Republicans about taxes. And on Sunday, he warned them that they risk losing control of Congress if they don't get their plan passed. But with retirement savings now off the table, Republicans will have to look for other ways to offset their proposed tax cuts.