Calvin H. Johnson (Texas) has published Repeal Roth Retirement Plans to Increase National Savings, 128 Tax Notes 773 (Aug. 16, 2010). Here is the abstract:

Roth IRA or 401(k) plans provide a tax exemption for profits generated under the plans. As much as $6,000 a year may be contributed to a Roth IRA, and as much as $22,000 a year may be contributed to a Roth 401(k).

The author’s proposal would repeal the Roth plans to increase national savings. Roth plans have an ambiguous effect on private savings, because they can be funded with the addition or continuation of debt and because taxpayers reduce their savings in response to tax exemption for target savings, including savings for retirement. Roth plans also reduce federal revenue.

Congress allowed taxpayers to convert to Roth plans starting in 2010, and it scored the conversions as producing federal revenue. A conversion from a regular plan to a Roth plan, however, is just a form of federal borrowing. Current cash to the government is offset by required revenue losses in the future. When taxpayers convert, they expect tax rates to go up or they have access to extraordinary returns, and the conversions are then an expensive and wasteful form of federal debt — unbudgeted and out of control.

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