House Education and Labor Committee Chairman George Miller, D-Calif., and House Ways and Means Committee's Subcommittee on Income Security and Family Support Chairman Rep. Jim McDermott, D-Wash., have entertained proposals that would tax 401(k) plans. The proposals, which could gain traction if Democrats win a supermajority in Congress in November, would replace the tax-exempt status of 401(k) plans with a $600 federal income tax credit. The plan is modeled on a proposal by Teresa Ghilarducci, a professor of economic-policy analysis at the New School for Social Research who also suggested allowing investors to swap their 401(k) plans for special-issue government bonds paying 3% interest, plus inflation.

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