The Trump administration is considering ways to motivate American households to invest in the stock market, according to a CNBC report. The move would be part of an upcoming package of proposed tax cuts.
The proposal would allow a portion of household income to be treated as tax-free for the purposes of investing outside of a traditional 401(k), CNBC reported citing four unnamed “senior administration officials familiar with the discussions.” Under one potential scenario, a U.S. household earning up to $200,000 could invest $10,000 on a tax-free basis, although the numbers were fluid, CNBC says.
The development comes as President Donald Trump seeks reelection in November. He has signaled a willingness recently to scale back Social Security and Medicare.
“The Trump administration is trying to pave the way for adjusting Social Security by giving people incentives to invest privately,” says Peter Cardillo, chief market economist at Spartan Capital Securities. “I don’t think a recipient of Social Security today would have anything to worry about, but future generations would.”
The White House didn’t immediately respond to requests for comment.
Social Security:Here’s what Trump’s proposed budget could mean for your benefits
A tale of two markets:Why are stocks and bonds diverging as coronavirus spreads?
“It’s a good idea to incentivize people to contribute to their savings to build up a nest egg, but I don’t think this will move the needle,” says Thomas Martin, senior portfolio manager at Atlanta-based GLOBALT…