Fee proposal in Obama administration's 2016 budget: a bad idea

In unveiling the proposal, the administration clearly is rummaging for new sources of revenue with which to pay down the nation's debt and fund high-priority projects. Example: rebuilding long-neglected infrastructure.

But there are better ways to pay for these things. As to roads and bridges badly in need of repair, a gasoline tax hike makes eminently good sense. It's long overdue: Since 1993, the U.S. federal gasoline tax has been 18.4 cents per gallon. Given the significant decline in oil prices over the past year — the going rate for Brent crude has dipped from $110 per barrel in July 2014, to just over $60 per barrel today — a higher gas tax will hardly make a dent in consumers' pocketbooks.

Alternatively, the administration could borrow more. Despite the now GOP-controlled Congress' concerns about the nation's rising tide of red rink, the nation's debt as a percentage of gross domestic product is quite low: just 2.8 percent. Given historically low interest rates, the servicing of government debt can be easily managed.

Discerning a pattern

Yet, the administration soldiers on with its 2016 budget proposal — one, unfortunately, that seems consistent with other administration and congressional proposals that could prove detrimental to those saving for retirement.

Among the high net worth, one source of concern is a deficit-cutting proposal the administration unveiled in May that calls for capping the value of individual retirement accounts at $3 million. For retirement savers in the middle market, a more serious issue is the pending debate on tax reform. North of $3.2 trillion in so-called tax expenditures are at stake.

As I reported at last September's annual meeting of the National Association of Insurance and Financial Advisors, a slew of financial service products could get the axe under the Taxation Expenditures Report, issued by Congress' Joint Committee on Taxation. To name a few: life insurance and annuity inside build-up (valued at $158.1 billion in tax expenditures), traditional IRAs ($69.5 billion) and Roth IRAs ($30.2 billion).

There's no question the government needs more revenue to meet current fiscal obligations and invest for the future. But tacking taxes and fees onto retirement savings vehicles and the financial services institutions that provide them is not the way to go about it.