How SHOULD Income Annuities Be Taxed?

Income annuities are a great way for retirees to get guaranteed income for life, but there's room for improvement in the way they are taxed. In an earlier blog, I outlined how they are currently taxed, and that while the rules are fair they don't generate the personal and societal benefits they could.

Taxes raise money for government operations, but they also sometimes serve to change behavior in society. Taxes on cigarettes are a well-known example because they encourage smokers to quit, especially when the taxes approach the cost of a pack. Society further benefits from a reduction in health-related costs.

I propose a tax cut that would provide retirees with more spendable (after-tax) income