I don't know what to do on this one.
The The Utah Educational Savings Plan encourages people to save for college. I agree with this message wholeheartedly. The program is administered by a political group (The Utah Board of Regents) as such it gives special 529 tax savings. Basically, you don't have to pay capital gains tax on profits from the investment if you use the investment for education.
It looks like the money will actually be invested with the multi billion dollar Vanguard Group investment funds. The UESP web site brags that they have already transferred over $2 billion in savings from smaller independent banks or independently owned stock to the massive Vanguard Investment group.
I love the message that people should save for college. The site tears my heart apart, however, because it is using special tax breaks to transfer savings from the financial instruments of the family's choice to one of these mixed government/private sector investment schemes.
It is like so many of the bastardized plans that come out of the government. I love the intention but see the implementation as something that does great harm.
2 comments:
It does sound like another one of those outsourced, privatized government fiascos.
It would probably be better if they would increase the funding for the state colleges and universities so the could lower tuition. While some families can benefit from the 529 plan, you're right that most of those were families that were already saving because they had disposable income. Those with little or no disposable income get no benefit at all from a 529 plan, but could afford to send their children to college if the tuition were lower.
The debate does a good job showing how the progressive mind works. First they claim there is a problem that demands a new government program. That government program inevitably concentrates power in an elite class.
The answer to the corruption of the government program is totalitarian control from the government. Both the corrupt government control investment scheme and the totalitarian are negative sum games that destroy local investment. The totalitarian solution dramatically increases the number of people in need.
A far better approach is to encourage people to save, but save in ways that they have control of the assets. By encouraging independently owned investments, you end up increasing local investment and decreasing the number of people who are in financial need.
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