Were you reading Legal Insurrection on the 3rd day of its existence?
If so, you would have known that Democrats were targeting your 401(k) and other retirement accounts, Will 401(k)’s Disappear in the Interest of “Fairness”?:
Powerful House Democrats are eyeing proposals to overhaul the nation’s $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.
House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.
So is it any surprise that a first step towards eliminating private retirement accounts will be part of Obama’s proposed budget? Via Breitbart (h/t reader):
The budget President Barack Obama will submit on April 10 will contain a proposal that would prohibit individuals from accumulating more than $3 million in Individual Retirement Accounts (IRAs) and tax-preferred retirement accounts.
According to a White House statement, the Obama administration believes the current rules allow some wealthy individuals “to accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving.”
“The budget would limit an individual’s total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million in 2013,” the statement said. “This proposal would raise $9 billion over 10 years.”
Targeting retirement accounts was a long time in coming, but it always was in the administration’s back pocket in case needed.
Alternative title: All I really need to know about the Obama presidency I learned at Legal Insurrection in October 2008.
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Comments
My boss the multi-milionaire laughed when I told him this was likely to happen 18 months ago… Is America moving away from global warming to Chile?
millionaire… tough typing at 30,000 ft.
$9 Billion over 10 years! Damn!
Does Marx have a beard in their wet-dreams?
How low info does one have to be to think this is a great idea?
Why is it everything these thieving scumbags want to do is presented as “reasonable”? Buying gold and silver looks more reasonable every day!
Lead and salt, too…
Can Cyprus happen here, you asked?
I always thought that the retirement accounts were a bit skewed.
Take IRAs, $2000 a year max. 401(k)-s ~$15000 a year max. 401(g) keogh-s (used mostly by doctors and lawyers) ~$40000 max.
Frankly, there are problems here, but these Democrats sound more like they want to strip seniors.
If the government is allowed to decide what the “reasonable level of retirement savings” is, why shouldn’t it determine what a “reasonable level of wealth” is? At some point you’ve made enough money.
This is a trial balloon for wealth confiscation which will initially be called a tax…unless there’s a “crisis” that “we” have to overcome “together”.
Worth noting, however, they are not proposing to TAKE it all above the “reasonable level”…just deny the “preferred” status of the funds.
…so just a LOT of it.
Apparently we agree. To make my last sentence more explicit:
This is a trial balloon for a process of wealth confiscation which will initially be called a tax…unless there’s a “crisis” that “we” have to overcome “together”.
Much as I hate to point this out…
there IS Constitutional authority to do this. Consider what an IRA or 401k is; they are both simply a means provided by the government to avoid paying the full freight on taxes in one’s good, productive years.
They are just creations of government…better government, to be sure…that the government gaveth, and may taketh away.
This is ONE of the great evils of a tax code that considers it is the lawmakers’ province to award or punish behavior.
The code should be burned down to the roots, and replaced, starting with a clean sheet of paper and repeal of the 16th Amendment.
I missed the Article and Section on that Constitutional authority!
The taxing power of Congress.
You can kick against these pricks all you want. What I said is just da facs….
Flat-out confiscation of wealth is not “taxation”. It’s an illegal taking. I realize lawyers will twist themselves into knots to justify the acts of other lawyers, but the 5th is clear that property cannot be taken without “just compensation” and “due process”. Passing a law saying “we can take your wealth” is not “due process” — if a hearing is required to cut someone off the dole, then a hearing damned well will be due for every person who will have their life savings raided by this Intolerable Act.
Crawford, don’t hyperventilate.
Deal with my first observation: retirement accounts are inventions of government to allow some shielding from NORMAL taxation.
This is not remotely a “takings” issue.
That crisis being the cost of monthly vacations going up.
There’s nothing in the Constitution which grants the government the power to decree an individual’s ‘reasonable level of retirement savings’. gs has nailed it – it’s a catspaw for collectivizing everyone’s wealth, to be controlled by some unelected elite. The term ‘Politburo’ would fit pretty well.
I guess you would have to make an annual withdrawl and be subject to taxation (and maybe the penalty if you are younger than 59 1/2) if your IRA exceeds 3 million at the end of any one year. This “tax” would not have impacted Warren Buffet or Bill Gates at all; mostly people who started early, maxed out contibutions, and made good investment decisions.
I used to think that Hussein supported the childish “zero-sum” economic model. He reminded me of the old TV show, The Jeffersons, which had the theme song, “We finally got a piece of the pie.” But after eating everyone else’s pie, anyone with half a brain must eventually ask, from whence comes more pie?
Now I’m convinced that Hussein is bringing us down, to our “just deserts.”
Inch by inch, the government insinuates itself as the sole arbiter of what people “need.” Eventually they will decide:
– You don’t “need” freedom of the press
– You don’t “need” freedom of religion
– You don’t “need” freedom of speech
.
.
.
Note: the list is endless ~
Things will only get more fun from here on out, folks.
Luckily this doesn’t cover DMV workers in CA with defined benefit plans granting them benefits of over $250k per year,
Citizens of the other 49 States would be well within their ‘rights’, per Obamathink, to demand that slices of those magnificent CalPers pies to be shared around.
Well, he did tell us he would have more flexibility after the election.
401Ks, IRAs and HSAs are smart individual savings accounts that Americans can use to prepare for the future. These investment vehicles should never ever be touched by the government. If a bill is ever brought before Congress to limit or confiscate my money I would take my money and run.
I never asked the government for Social Security or Medicare. I wish I had all of that money taken out of my paychecks. I would have invested it for my retirement. Instead the government is using my cash to finance Democrat’s elections.
In the interest of Fairness and Solidarity with the Workers of America: since the average American does not have a pension, I propose that all government workers immediately have their pensions cancelled, and the money in pension plans go to pay down the common debt!
I don’t think any Progressive could really argue with taking money from the rich (government employees) and give to the poor (non-government workers).
I wonder if the administration be as forceful in limiting the net present value of public worker retirement pensions (funded by other taxpayers of course), already over $500,000/year in some cases, with the same passion as it has in going after private wealth. Or maybe because the purchasing of votes with other people’s money might be impaired, Obama will just let this slide?
They’ll start with the “rich” and then take the rest
http://money.usnews.com/money/blogs/capital-commerce/2008/10/29/401k-foe-teresa-ghilarducci-the-most-dangerous-woman-in-america
“…a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.”
Oh boy, another collective guaranty by the guv’ment!
Slowly, all of the incentives to be successful are being removed in the interest of “fairness.”
You youngsters really have a lot to look forward to…
The only good news that will come of this is that there isn’t a single person past the age of 35 who will vote to keep any politician, Democrat, Republican, etc., who proposes raiding retirement accounts. Talk about a realignment election? It would wipe out Leftism’s power to enact anything for a generation.
The retired? They would vote them out. The near-retired? The same. People in their prime earning years in their 40s and 50s? No way would they vote for politicians who would raid retirement accounts like social security. People in their 30s, possibly in their late 20s? If they had half a brain they would realize Leftist politicians, if left to their devices, would treat their retirement accounts like slush funds, and replace their money with IOUs.
Please let them embrace it and campaign on it. After the election, Republicans would likely have majorities to impeach Obama’s Supreme Court appointments, and repeal his entire presidential agenda with the votes to overcome a Presidential veto.
The 90,000,000 people who have left the workforce might not see a politician’s raiding of higher end retirement savings as a disqualifier for office.
Unfortunately, the 47% who are on the government dole will vote for anything that redistributes more wealth their direction.
I see your point in a sense. The Democrats are not going to lose the massive advantage they have with voters who are people of color. But they could potentially lose the advantage they have with the higher educated, because they are smart enough to realize that Obama and the Democrat’s changing definition of what “rich” is will target ANYONES retirement – possibly even pension – funds.
You think Enron financial scandals were bad? Wait until the government starts raiding retirement and pension accounts.
Nothing will make people NOT SAVE than the government suggesting the rich’s retirement savings plans, which will eventually lead to middle class’s savings plans, being treated as another heap of money that the federal government can shovel into.
People in the 1930s couldn’t have been more right. Put your money in a mattress.
No. Don’t put your money in the mattress. Convert it to a precious metal or precious stones, THEN put it in the mattress.
Always remember: Inflation is just a ream of paper and a barrel of ink away.
At this point, better yet, buy BitCoins. At least that (in theory) can’t be tampered with.
Once again Obama proves he doesn’t know anything about economics. Wasn’t part of the problem with the financial melt down that people weren’t saving enough, making less money available for investing? The only thing I remember from Econ 101 is opportunity cost, so I’m not the person to be discussing economics, I really should be listening. But, for every dollar saved, there is a ten fold multiplier of dollars available for investment. Won’t taxing 401(k)s and IRAs reduce the money available for investment? Wouldn’t that lead to more financial problems, slowing down the economy?
Just a note that I see nobody else has addressed here:
This isn’t about “Taxing 401(k)s.” Not really. This is about changing the tax incentives for where that money is put.
Right now, you can invest that money just about anywhere and get tax deferral. This is about denying that tax deferral. And where will that money then go? I’ll tell you:
Municipal BONDS (which are tax exempt on the federal level).
The States and Municipalities are getting screwed because nobody wants to park their cash in Muni Bonds due to the risk of default because so many locations are overspending. If they get rid of tax-advantaged retirement accounts over a certain threshold, that money will flow to other “tax advantaged” investments.
This is all about paying off the Municipal Unions by propping them up through purchase of Municipal bonds and funding of their retirement payout accounts (aka pensions).
I see the White House blamed demographics for the lowest worker participation rate since 1979, most especially those older Americans.
Until the bond market regains any credibility (i.e. interest rates go above 0%), most of those older Americans won’t retire because their 401(k)’s just aren’t performing.
It’s interesting that these older workers are to blamed for the young not getting jobs by supposedly not leaving the workforce, and, on the flip-side, they are blamed for low worker participation rates by supposedly leaving the workforce. It can only be one way or the other.
Remember back in the late 70′s when they told us that if we saved $2000 a year and interest rates remained at 17.4% that by the time we went to retire, we would have a million dollars. Seems so silly now.