Letter: Tax policy that helps the rich get richer

Published: 6/12/2019 12:01:22 AM

A recent advisory note informing me of contribution limits to a 529 College Savings Plan caught my attention.

I doubt that there are very many citizens who will notice, or even care about, this new limit. How many of us can afford to deposit $500,000 to assist a child or grandchild facing the high cost of higher education? We should care because this is just another tax benefit that has been conferred on the ultra-wealthy members of our society.

A hypothetical example: Grampa Warbucks, in celebration of the birth of a granddaughter, donates $500,000 to a 529 account dedicated to that child. Assume it earns at a compounded rate of 6% per year. By the time the young lady is 12 years old her college account will have grown to $1 million. That’s a $500,000 increase that is exempt from taxation.

Any withdrawal used for education is also tax exempt. We should care about tax policy that enriches the already rich.



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