Tuesday lawmakers for the first time began considering specific tax breaks to reduce or otherwise change, laws that allow millions of Americans to avoid taxes while saving for retirement.
Tax incentives for employer pensions, 401(k) plans, individual retirement accounts and other savings programs rank among the largest breaks in the tax code, costing Washington more than $200 billion a year in lost revenue.
All told, the U.S. Treasury loses about $1.1 trillion annually to more than 200 credits, deductions and other tax breaks. Politicians in both parties — including President Obama and Mitt Romney, the Republican who is likely to challenge his reelection bid — have called for recapturing some of that cash and using it to finance lower tax rates or to reduce federal budget deficits.
Until recently, both sides have been reluctant to hint at which of the many popular perks might get the ax. That is starting to change, however, as lawmakers and policy analysts begin preparing for the prospect of overhauling the tax code as soon as next year.