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Saturday, August 19, 2006

When a good result is not necessarily good

Talk Left points out that a little known proviso in the new pension "reform" act allows gays to pass on their 401(k) savings to a same-sex partner free of taxes, just as married couples were able to do before the new law was adopted, and seems to approve the measure.

While it is true that this law has leveled the playing field between heterosexual and homosexual couples, it has done so at a cost.

In fact, the law allows 401(k) owners to pass on their savings to anyone free of taxes. In most cases, that means they can pass their money on to their children tax free. It's one more way for the rich to preserve their wealth from one generation to the next without being taxed at all. You make the money and stuff it away tax free, and then you pass it on tax free.

Meanwhile, the poor slob who can't afford to invest in the 401(k) pays all the taxes for the rest of us.

If we want to level the playing field for same sex couples, there are better ways to do it, e.g., require that same sex unions be treated the same as married couples under the tax law.

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