The 1942 pension tax break originated as a wartime excess-profits tax avoidance

Evidence

Retirement accounts allow people to have income once they stop working—without them, many more Americans would spend their final decades in poverty—but don’t think they were created out of care and concern for older workers. The Revenue Act of 1942 incentivized companies to create pensions by levying a huge tax (between 80 percent and 90 percent) on excess profits—defined as corporate profits that were greater than they’d been prior to the war. Companies could avoid the tax by placing some profits into pension trusts, and then deducting those amounts from their overall profits. — Dorothy A. Brown, The Whiteness of Wealth, 356

Categorization

• QUESTION: Worth chasing: how did a loophole to dodge a wartime excess-profits tax become America’s sacred retirement policy? Tracing the intent-to-effect drift is a compelling thread.
• SEED: Angle: America’s retirement savings system is an accidental loophole — its designed purpose was none, its actual effect was to funnel tax subsidies to those already in stable white-collar work.