Quote Originally Posted by Starter View Post
Not sure how it would work there, but here that proposal would be devastating to retired people. For many, income from interest and dividends, from investments acquired over their working life, represent a substantial portion of their total income.
The thing is though, if you exempt retirement funds from taxation, then that's where capital gets diverted. Capital is like water, it follows the path of least resistance.

The effects of that in Australia, have been that capital from retirement funds have flowed directly into the housing market. That's fine except that the price of a house in Sydney in particular has risen from 4.3 times average wage in 2000 to more than 10 times today.
First-home buyers account for less than 2% of home loans in NSW. I mean that's cool, provided you don't mind locking an entire generation from the housing market.