Will Increased Dividend Tax Rates Detrimentally Impact TSP Stock Funds?

By on November 20, 2012 in Retirement with 54 Comments

Editor’s Note: This article was originally published at TSPStrategies.com and has been reproduced here with permission from the author.

Now that the 2012 elections are over, we have some additional certainty in tax policies.  Taxes will likely go up.  These taxes will almost certainly include an increase in both the dividend tax rate and the capital gains tax rate, from the current 15% to 20% for capital gains and up to 39.6% for the dividend tax rate.  Moreover, with the Patient Protection and Affordable Care Act, an additional 3.8% surcharge will be added to capital gains and dividend tax rates for certain income levels.  And as certain other deductions are phased out, the 15% tax rate for capital gains increases to 23.8%, and taxes for dividends nearly triples to around 44%.

For high-income investors in taxable accounts, this means that while they kept 85 cents of every dollar earned as a dividend in 2012, in 2013 they keep about 56 cents.

As has historically been the case, increased dividend and capital gains tax rates can negatively impact stock returns in coming months and years.  When taxes are set to triple on a significant segment of the investing population overnight, you can bet that this will have a detrimental impact on stock market valuations.

In general, with an increase in tax rates, investors who rely on income from dividends and capital gains will expect a lower return on their investments, since the increased taxes reduce expected returns for stocks.  This in turn reduces demand.  Reduced demand for stocks means stagnant or reduced prices, which in turn detrimentally impacts stock funds such as the C, I, and S Funds in the Thrift Savings Plan.

This is not meant as a value judgment, this is math.  When returns are suddenly and predictably reduced by what the government takes, investor expectations are changed.

I know what many readers are thinking: TSP funds are tax-advantaged accounts, both for regular and Roth TSP accounts.   Therefore TSP participants do not have to worry about increases in dividend or capital gains tax rates.  While true, this unfortunately misses the larger picture.  Tax-advantaged accounts invested in stock funds – TSP and otherwise – make up only a portion of the overall stock markets.  Many stock market participants will pay increased dividend and capital gains tax rates, and these expected increases in taxes will cause these investors to re-calculate their investment decisions post-election.  These investors might either sell a portion of their investments to reallocate into investments with fewer taxes (like tax-free municipal bonds), or they will just not invest at all and wait for a fall in prices until the expected returns readjust to something more advantageous.  This will in turn at the very least keep markets stagnant, or will drive stock markets lower.  So all investors, TSP participants included, will be adversely impacted by higher tax rates.

And importantly, the new tax rates will differentiate between dividend taxes and capital gains tax rates, with dividends paid at a higher tax rate than capital gains.  This means that some companies will opt for a lower pay-out of dividends in favor of ways to increase the share price of the stock, due to the preferable capital gains tax rate (e.g., selling a stock that has risen is taxed less than a higher dividend from the stock).  As we experienced in the 1990s, however, this can increase company management incentive to manipulate the price of its stock through opaque means, or at the very least it can drive companies to buy back shares of their own stock even if the price is over-valued. Dividends are preferable because they are transparent evidence that the company is making money and returning a portion to investors.

One corporation – IDT Corporation – has already taken action to reduce its dividend payments for 2013.  On October 23rd, it announced the payment of a special dividend on November 13th, followed by the suspension of dividend payments for 2013, specifically citing expected dividend tax increases:

“With the uncertainty surrounding the federal tax treatment of dividends, including the scheduled December 31st expiration of the 15% federal tax rate on dividend income, our stockholders are best served by paying this dividend now. We have the flexibility to pay the special dividend while maintaining our strong balance sheet and continuing to invest in the growth of our telecom and other businesses. We do not expect to pay a regular dividend for the four quarters of fiscal year 2013, and we will monitor our operational results, cash needs and anticipated performance to determine the best way to deliver value to our stockholders going forward.”

Paying a special dividend now takes away from dividends next year – and thus, potentially, from expected returns.

Certainly, some suggest that an increase (even a tripling) in rates might not detrimentally impact dividend-paying stocks.  The investment fund company WisdomTree, for example, has a long discussion of why dividend stocks were not impacted by the 1993 increases in dividend and capital gains tax rates (see “What Could President Obama’s Plans for Dividend Taxes Mean for Financial Markets?”).

It is useful to point out that even though President Clinton raised taxes during his administration in the 1990s – from which WisdomTree takes as a starting point to measure 10-year returns – he also cutthe capital gains tax rate in 1997 (but importantly, not the dividend tax rate), from 28% to 20%.  This in part helped to propel the impressive stock market returns in the 1990s – together with a friendly Fed, the “Great Moderation” after the Cold War, and of course the internet bubble…

And as WisdomTree notes, there really aren’t any alternative investments that would be attractive now.  Bond rates are abnormally low.  Interest on bank accounts is a joke.  Commodities such as oil, gas, and precious metals are speculative at best.

And rates on investment income from bonds will go up with individual tax rates as well.  There is a real threat of inflation in the coming years, so any investment in bonds will have to take into account the sudden increase in inflation – and decrease in the value of bonds – in the not-too-distant future.  Those with a passing memory of the 1970s know what this can do to an investment portfolio, in both bonds and stocks.

Others are less sanguine about the impact of a sudden and dramatic increase in tax rates, with one investment advisor suggesting that stock markets will fall 30% due to the increase in dividends and capital gains.  Of particular note is the following example:

“Consider a stock trading at $100 that pays a $10 dividend every year. Under current law, an investor pays a 15% tax on that dividend, so he gets to keep 85% of it, or $8.50. So the after-tax yield on that stock is 8.5%.  After year-end, under current law, the top dividend tax rate will rise to 43.4% from 15%…So on Jan. 1, an investor won’t keep $8.50 of that dividend—he’ll pay a 43.4% tax and keep only $5.66.  Suddenly, a stock that yielded him 8.5% now yields only 5.66%.  If 8.5% was the after-tax yield that investors demanded in order to allocate their capital to that particular company, then 5.66% will not be sufficient.  That company’s stock price will have to fall until it once again offers an 8.5% after-tax yield.  Precisely, the stock price has to fall by the percentage difference between $8.50 and $5.66. It will therefore fall to $66.60 from $100—that’s 33.4%.  And it’s also a good first approximation of how much the overall stock market will fall when dividend taxes rise to 43.4% from 15%.”

This is an example of how incentives matter and how policies have impact, whether it’s dividend tax policy, the Fed’s historically low interest rates, or massive deficits causing a freeze to the pay of the federal workforce.  We are all impacted by a slow-growth economy and massive deficits, even those who serve in the federal government and in the military.  Are we prepared for a decrease of up to 30% or more in the C, I, and S Funds due in part to these policies?

At the very least, higher expected taxes for capital gains and dividends will act as headwinds on stock markets in the coming months.  Coupled with uncertainties related to the “fiscal cliff” at the beginning of 2013, stock markets have already begun to re-adjust.  I’ve followed Strategies II and III in TSP Investing Strategies as the markets have fluctuated this year, and I am prepared to implement Strategy IV depending on how the markets re-adjust in the coming months.  While I hope for the best, I continue to prepare for more turbulence ahead.

W. Lee Radcliffe runs the Web site TSPstrategies.com and is the author of TSP Investing Strategies: Building Wealth While Working for Uncle Sam.

© 2016 W. Lee Radcliffe. All rights reserved. This article may not be reproduced without express written consent from W. Lee Radcliffe.


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  1. Misterpcus says:

    After reading comments from everyone, it’s quite obvious to me that none of you realize that your country is moving to socialism.  It’s already happened in Europe and now it’s here.  The federal government is going to take as much from you as possible and spend it on social programs.  The feds don’t create new monies.  They simple take from you poor, ignorant people and disberse it amongst the populus in social programs.  No new monies are created; you’re simply taxed to poverty.  In essence your wealth which took 50 years to accumulate is being drained by the large corporations and the federal government.  Sorry!

  2. grannybunny says:

    This opinions expressed in this article are reminiscent of Papa John’s — falsely — claiming he would have to raise his pizza prices and shorten his employees’ workhours, due to Obamacare.

  3. sandiegoret says:

    I am somewhat confused about Econ 101.  I think it depends upon where to took it.  If you took Econ 101 in Chicago under the Freedman school of economics that have been used to funnel our wealth to the richest companies under Reagan, Bush I and Bush II (with some real help from Clinton) then I can see why you think the sky is falling with a second term Democrat who only partially believes in that economic model.  However, if you look to reality, the economy was so bad after Reagan that Bush I had to raise taxes and after Bush II it totally collapsed.  So far, we’ve been slowly growing under Obama which, in my mind, is healthier than growing like a rocket.  For too long we have defined our economic success by the growth and profit of businesses rather than the wellbeing of the people of the United States.  Our wellbeing should be defined more by employment rates and general ability to survive and prosper to a degree rather than by how much debt we can accumulate to buy more toys or how well the rich boys at the stock exchanges are doing.  

    The one thing I feel pretty sure of is that economics is a messy business and always will be and that the Friedman model is simply a way of setting up the Monopoly board and that now the soon to be winners have hotels on Boardwalk and Park Place and own the utilities (government).  A stronger central government does not have to be as ineffectual as some of the socialist experiments to still balance the different mechanisms of the economy.

    Finally, corporations should have to pay a lot of taxes to earn the LLC designation.  By limiting liability we have given them a powerful tool that inoculates them from much of the harm they do.  In the beginning the courts required corporations to be good citizens but along the way they gave up and said that all corporations need to do is take our money as efficiently as possible.  Let’s take it back and if it slows down big business too bad.

    • hathatsfunny says:

      I read you your comment with an open mind, until I realized that you don’t know what the heck you are talking about regarding state  laws governing corporations and how it relates to IRS taxation rules with this
      statement: “Finally, corporations should have to pay a lot of taxes to earn the LLC designation.”

      You are clearly ill-informed.

      An LLC  (Limited Liability Corporation) is not a “designation” — nor does it need to be “earned”.   It can be applied for via legal documents through any state’s govt. And, an LLC has absolutely NOTHING to do with taxation issues. 

      In fact, it’s a way for a small business person to protect itself from lawsuits for claim on his/her personal
      property in the case of a business dispute.  LLCs have NOTHING to do with the taxation or the IRS.  They are legal entities governed by states,, where the owners file taxes as IRS form 1040 tax filers (probably just like you).  The IRS sees LLCs just as any other individual tax payer. LLCs receive no preferential treatment in taxation from the IRS, it’s solely a legal entity, and is governed by the state in which the business operates.

      But your comment should be highlighted as an example of the epidemic  ignorance of the uninformed
      — which has now become the broader electorate in America, wherein their proclamation is that small businesses are “rich” evil bastards not “paying their fair share.”

      News flash to sandiegoret: 
      Probably one of  your struggling neighbors in this economy who makes $10,000 a year on Ebay might have filed with their state govt. as an LLC in that small business, just to protect themselves in case some nutty buyer threatens to sue them, and so that they don’t lose their car and home in the fight for such frivolity of litigiousness aimed at their family.

      But facts likely elude you.

      Businesses and their profit are evil, and they will never pay enough in taxes to satisfy you.

      • sandiegoret says:

        I do have some idea what limited liability corporations are, why they came about and how the LLC is used.  First, I apologize for any impression that I was implying all LLC situations as being the same–I thought for the purposes of these comments that I was referring to large corporations–mostly incorporated in Delaware where they get very favorable treatment and protection. In my mind size matters tremendously when it comes to corporations.  From my experience the larger corporations become the less connected they are to the community and therefore the more we need to be able to pierce the corporate veil and hold decision makers liable when their decisions harm the public.  Also, I realize that LLCs are entities of state law although there is much federal law that relates to them as well.  My point is that getting the LLC gives large corporations certain advantages conferred on them by the government and that it would not be unreasonable for the government to make them pay more for that protection.  That should include making them pay taxes to the extent that they cannot grow beyond a certain point and they cannot influence our government to act on their behalf.  (Yes, this is simple, but no more simple than the worn philosophy that “the market will take care of itself.”)

        As I acknowledged, the whole situation is messy but that doesn’t mean we should stop trying to make it as equitable for society as possible.  We need to stop treating large corporations as people (Citizens United, aside) and treat them as tools that society can use to make our society function.  Yes, some money should be made by the people who operate the corporations but we should watch them closely and make sure that it’s proportional to the good they are providing the country.  That will not create a situation as orderly as Milton Friedman envisioned but it would lead to a messier and far more equitable society that would benefit more people than the present structure.

        I really don’t get your attack on me as being anti small business.  My comments were and are directed toward large multi-national corporations.  I still believe that small businesses (and corporations) are the backbone of our country and should be encouraged.  (That does not mean getting rid of regulations that require them to be socially responsible) but it does mean that we work to give them a level playing field and as much encouragement as we can.  

        • hathatsfunny says:

          While I know you mean well, you are still clueless.

          “Getting an LLC” has nothing to do with taxation.  I don’t have time to write about it, but LLCs are individuals who gain legal protection from business disputes.  It has NOTHING to do with taxes or tax preferences, or loop holes.

          Your local bar, restaurant or landscaper probably is an LLC.  You just don’t know it, but go there.  If they are somewhat successful, and have a handful of employees, he or she probably is “rich” in Obama’s eyes. Their family business probably makes $250k a year… so that makes them rich for Obama.  They also pay probably 5% to the state’s unemployment fund, 10% for business insurance.   In reality, they make very little, and have risked all their fortunes to sustain a business.

          But they are rich, to Obama, and must be punished.

          What’s worse, if their business (if they sold it) might be worth $1 million in assets of property, equipment or other things they purchased and paid off on loans over the years..  Something they worked for all their lives.  If they died, Obama’s tax plan would tax their children 50% of that business’s worth.  There’s no way the children could afford the taxes to keep the business going, so the business would go under, the employees would be fired — all so that the Obama’s ‘fairness” of the evil rich “will pay their fair share”…and so that Obama’s view of America’s plutocrats will be shut down.

          Obama will get his way in the next few years.  Millions of small businesses will be shut down.  Millions of employees will be fired.  The backbone of America will be damaged greatly.

          All because Obama thinks that employees (he calls them “labor”, but small business owners know and treat them as family for decades, and treat them really well) have been proclaimed as the “one percent” … and in some cases as the white, angry majority who are racist tea-party folks, etc.

          We will see how this works out.

          But it won’t be pretty.

          But I didn’t vote for Obama, so there’s no blood on my hands.

  4. wombat1951 says:

    Trying to explain economics to the Left when they are on their “fairness” high horse is useless.
    Higher rates on dividends and cap gains will of course lower overall returns of ANY investment vehicle that experiences them — like some of the funds in the TSP.    Ergo — overall returns WILL be lower when taxes go up.
    The TSP is not immune to the immutable laws of economics.

    • jimijr says:

      I see no merit in your argument as it applies both ways — higher taxes on wages means less take-home. You do not say WHY investors deserve a higher return. Don’t wage earners, too?

      • hathatsfunny says:

         no one ever got a job from a wage earner.

      • wombat1951 says:

        If the Dems get their way, your take home will go down as they want everyone’s taxes to go up.
        In any event — the article was all about how and why TSP returns will be less when taxes on cap gains and dividends goes up.   Not sure how and why that has anything to do with taxes on “ordinary income” — e.g., wages — unless you are talking about letting those “terrible” Bush tax cuts expire for everyone, like many on the Left have been begging for.

  5. Joe2343 says:

    One thing to remember about dividends is the earnings have already been taxed.  The corporation pays a tax on the earnings and then when it distributes the remaining after tax  earnings to the owners (stockholders) via dividends, the earnings get taxed again. That is why dividends should be taxed at a lower rate than salary.  The salary paid to employees is expensed and not taxed to the company.  The dividends (and to some extent retained earnings in the form of increased asset value of the company) are taxed twice.  It’s a shame some folks can’t understand the principle that there’s no such thing a a free lunch.  If the Government gives you something it has to take it from somebody else.

    • jimijr says:

      You make no argument why dividends should be taxed at a lower rate. That the company distributes them from after-tax dollars seems to me irrelevant. So what? To the recipient, they are income and the individual owes income tax. Who says a dollar can only be taxed once? What about sales tax, taken from after-tax dollars?

      • mayorofrealville says:

         so you really believe that if that anyone who puts their already taxed once income back into investments at high risk, that any gain they should get should be double taxed at a greater rate than original source of that income?

        Really?  You really think investors are going to do that?

        The fact is that only fools would depart with their money so quickly (and it’s not just the “Rich”), which means they will not invest (and will divest).. which means the capital available for companies to use to expand will decrease… and thus companies cannot grow… less innovation and new products will be produced…and less people will be hired… and, yes, eventually your returns in the TSP will SUCK THE BIG ONE, too.  And so will the returns on the pensions of your union friends fall apart.

        “A fool and his money will soon depart” should be the mantra of the Obama administration in his followers.

        • jimijr says:

          My friends and colleagues in the National Weather Service Employees Organization recieve no pension from that source. Investing is gambling, we all learned that just a few years ago. Gambling winnings are taxed as income. Moreover, taxes are assessed only on gains, not previously taxed investment monies. And again I reiterate, taxed at the same rate is not necessarily taxed at a higher rate. The two can be equalized at an intermediate rate, or at the lower rate.

          • hathatsfunny says:


            Gambling winnings are not taxed as income, but as capital gains.

            And investing is not the same as a crap shoot with free drinks at the casino.

          • grannybunny says:

            Sorry, but gambling winnings are ordinary income; I have considerable personal experience in this issue.

        • skisok says:

          Let the money depart.  Let’s see if they can find a good safe place to put it.  In fact, that’s what I call patriotism…not investing in your own counrty!

        • grannybunny says:

          It’s not double taxation; only the gain is taxed.

  6. LittleLouie says:

    It is unfortunate that the President and so many Democrats think that only wealthy people invest in stocks and receive dividends and capital gains.  The middle class also save and invest.  I think any investment income should be taxed at a lower rate, whether from capital gains, dividends, bond interest, savings account interest.  The government should be encouraging everyone of all income levels to save and invest.  If you raise taxes on investment income then there is no incentive to save.  I guess the government wants us to spend our entire paycheck and not save a dime.  Then we can all be totally dependent upon Social Security and the government in our old age.  Sure, you’re going to make the wealthy pay a little more on their investment income, but you’re hurting the middle class, what’s left of it, even more.

  7. Smcieplak says:

    When you earn a salary the return is certain- when you invest, you’ve already paid taxes on the amount that you are investing and the return from investment is uncertain — additionally, your investment income as well as your entire investment is at risk (you could lose it all) – If its fairness to tax passive income equally with salary, then it would also be fair to have someone work and risk being paid less than his expected salary or not being paid at all- That would be balanced

    • jimijr says:

      The same argument is made for other forms of gambling: it is all at risk. In fact, you can deduct such losses. If they can be deducted, they should be taxed, just like winnings at the tables. Income is income.  

    • skisok says:

      So I guess taking away the state and local tax deductions is fair (isn’t that tax on tax) and I guess taxing hedge fund managers salaries, oh I mean capital gains, at the 15% rate is fair?  I guess because workers cannot write off their expenses related to work like the corporate world is fair?  What I propose is that there is no corporate tax and that individuals pay the taxes on profits on a percentage basis.

  8. skimeister says:

    This is nothing but economics 101. Unfortunately, those who voted for the “messiah” flunked that class.

    • ReaperComing says:

      thank you!!

    • USPS Letter Carrier says:

      “That company’s stock price will have to fall until it once again offers an 8.5% after-tax yield…  It will therefore fall to $66.60 from $100—that’s 33.4%.  And it’s also a good first approximation of how much the overall stock market will fall”

      This “author” and you with your understanding of Econ 101 really think a similar real stock will collapse 33%? That the stock market will fall 33%? Doesn’t sound like a load a horse manure anyone else? 

      If  the cap gain rate increases it affects all stocks and the investor has little alternative to invest elsewhere.

      And for all of you working FEDS, how does this affect how you invest in your TSP account? Are you going to change anything? Increase or decrease contribution or change your asset allocation? To those who believe that Econ 101 dictates this so-called 33% stock market collapse will occur – why  haven’t you bothered to state what Econ 101 tells you about what changes to make to your TSP account? Or didn’t that occur to you?

  9. NCSandtiger says:

    THE SKY IS FALLING!!!  More alarmist claptrap from a purveyor of a financial advice book.  Selling snake oil to gullible and fearful federal employees. 

    • Rusty1 says:

      The author didn’t say the sky is falling.  To experienced investors, (after) tax equivalent
      yelds are an important consideration in investment strategy and decisions.   Have to agree with skimeister, “This is nothing but economics 101.”

      • USPS Letter Carrier says:

        “Precisely, the stock price has to fall… to $66.60 from $100—that’s 33.4%.  And it’s also a good first approximation of how much the overall stock market will fall.” -> article author

        A 33% drop in the stock market doesn’t sound bad enough for you? Have you heard a worst prediction from anyone else? How much must it drop for you consider it ‘sky falling?’  

        More importantly for you and those of you who think this is Econ 101, what does Econ 101 tell you about what changes you should make to your TSP account IF this ‘non-sky-falling’ event occurs?

  10. jimijr says:

    Two thoughts. One, all income ought to be taxed equally, to me. Why should interest and dividends and cap gains — passive income — be taxed at a lower rate than wages — active income. It is an issue of fairness: if all men are created equal then so is their dough; income is income. Second, if you are like me and own dividend-paying stocks inside a traditional IRA, that income is already taxed as though it were wages.

    • wombat1951 says:

      It has been generally accepted by Congresses over the years — and most of the time the Dems have run Congress — that taxing Cap Gains and Dividends at lower rates encourages the very economic behavior that creates those gains, and hence increases economic activity thereby.
      That’s why they are taxed at lower rates.
      Now — if you don’t think that the economy is helped in anyway by doing this, then make your case.
      Or, even if you do accept that the economy overall benefits when risk capital is taxed advantageously BUT it is “unfair” — again, make your case.
      BTW — the benefit of your IRA is that you are NOT taxed on any gains or divendends when taken while your money is in the IRA, and you only have to pay taxes on withdrawals from the IRA when that occurs.  The theory, of course, was that when you draw from your IRA you would be in a lower tax bracket.   But the Dems are going to make sure that won’t probably happen!

      • jimijr says:

        Our labor enables companies to earn profits. Why should that be taxed at a higher rate? I did not say that passive income should pay a higher tax, only that they should be taxed at the same rate as labor.

        • hathatsfunny says:

           the opportunities for “labor” (also called employment) are created by investors who are taking great risks on income they already paid taxes on.

          You seem to think that employment opportunities are created by employees. 

          In fact, the model of logic you are providing presumes those providing employment are greedy and have taken from employees in order to become wealthy.

          There are two sides of the coin of “sin” you are projecting.  One is greed.  The other is envy.

          Neither have anything to do with why America is the great country it is.

          But economic facts and history elude you.  There is no manner of taxation on the rich that would satisfy you.

        • wombat1951 says:

          Hey — I’m all for lower taxes for all!!!!   Why didn’t you say so 🙂 ???

    • Been There says:

      How would you like to tie up a lifetime of savings to pay for a forestry farm and pay taxes on it for 40 years until the timber matures, then pay regular income taxes on the timber sale. You would find your profit to be zero along with your net worth. Please think before you speak.

    • Gail218 says:

      That is exactly why you don’t want to pay more taxes for dividend and capital gains! Duh!!

      • jimijr says:

        Your assumption is false therefore your conclusion is invalid. What I want is for the rates to be the same. This could also be achieved by dropping the rate on wages.

        • hathatsfunny says:

           “What I want is for the rates to be the same.”

          What you want doesn’t matter.  It’s not how it works.  And it’s not the reason why you are paid for whatever you do in America.

          Get back to us when you understand why America is successful, how government is funded, how businesses are capitalized, why businesses provide employment, and the reason American businesses and private investors are willing to invest.

          • grannybunny says:

            The real reason for the discrepancy is that wealthy investors — some of whom have 0 so-called “earned income” – have more lobbying clout than workers.

    • grannybunny says:

      Don’t pay any attention to the detractors below; your analysis is correct.

  11. ReaperComing says:

    I am refreshed that some one else actually understands thsi process of a free market! Thank you!

  12. Fed_Peasant says:

    I agree with the article 100%.  Also, include the foreign earnings of US corporations, where that money has yet to be repatriated to the US & it’s tax system.  There is huge revenues yet to be taxed by the US authorities.  Another possibility is US dividend investors gravitating to foreign blue chips, in certain countries where they have a tax treaty with the US.  For years, I have paid foreign taxes on holding of foreign stocks.  I declare the foreign tax paid, & do not face a second US tax.  It depends also on the country.  Certain future US high income investors will move chose to pay those foreign dividend taxes, as a cheaper alternative to US dividend taxes.  They will own Vodafone instead of ATT.

    • USPS Letter Carrier says:

      Looks like Laborman may disagree with you -  “Laborman: ‘I have a degree in Economics from the Wharton School and my analysis of this is that it is a lot of crap.  There are a lot of wild assumptions about future tax rates.  But most importantly, it completely ignores the fact that most investors have no other good alternatives … I don’t see the rush to sell that this author assumes. ‘ “

      What Laborman alludes to and everyone (including the author) fails to address is:  what to do with one’s TSP account.