Is the wealth tax a valid fear?

[azanon]

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I'm trying to remember where i read about that, i think it was in "Millionairre Next Door".

What has really concerned me these past few years is the relatively large amounts of money the government is letting people put into retirement accounts; such as TSP, 401K, and IRAs. Its as if they're up to something....... Apparently, it has been brought up before in the past but voted down, a tax on unrealized income. If people do start maxing these vehicles out, that will mean less taxes and the government is going to eventually miss getting this money. Someone will eventually rationalize that middle-income folks really shouldnt have a few mil on them in their 50s and 60s, and that a "wealth tax" should be applied to redistribute the money.

If the governmentcan invent Social Security, i wouldn't necessarily be shocked to see a "wealth tax" implemented. Its another reason, albeit small, that i'm not going to go overkill on retirement.

 

[Rolo]

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This is why you want to keep your eye on class-envy and class-wars.

 

[Wimpy]

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They could impose a wealth tax or they could also raise the threshold for qualifying for Social Security, Medicare, etc.

They could say, for example, anyone with a total amount of money in their IRAs, 401(k), TSP etc., equal to $500,000 or more would have their Social Security 'entitlement' off-set by 25% or so to the negative. In other words, those that didn't save and plan for their retirements would be rewarded with a full 'entitlement' and those who were thrifty would be penalized with a reduced 'entitlement'. In principle it will probably be set up similar to theFERS sick leave plan. If you spend all your sick leave you will be eligilbe to tap the pool of donated leave. If you save all your sick leave you lose it.

I believe that back in the early eighties there was proposed legislation providing for a 'means test' for Social Security. The suspected dollarthresholdtriggeringan off-set of benefits was, I believe, about $250,000. Since the dollar has lost more than half of its value since 1980, an inflation adjusted threshold could very well be around $500,000 if thisproposal gets resurrected.

Yes, there could be a point thatformal retirementsavings accountscould represent a liability, especially to those that are counting on Social Securityas being a significant part of their 3-legged retirement stool. All of thoseemployees of bankrupt airlines who have lost their pensions and now the Delphi, GM, and Ford employees seeing the handwriting on the wall regarding pensions and healthcare benefits in jeopardy... the politics of envy will nodoubt eventually raise its ugly head.

 

[Rolo]

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Ah, yes, the ol' punish the responsible and reward the irresponsible route...

 

[grandma]

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...so does that make buying silver & gold a solution? (serious question.)



Shoot - my lock-box is only 3x5 - !!! :l:l:l

 

[ou81200]

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Hello Guys---

My two cents worth---. First, I don't think social security is going to be as good as it is now. Right now, about five workers supports one who is on social security. This is a far cry from at it's peak, about fifteen workers supported one who was on it.

As for airline pensions , Delphi,etc. I don't think their retirement plans were diversified as others are now. Look at whay happenedwith theEnron retirement.Alot of the retirent stake in that plan was from Enron stock itself. I heard somewhere that any employee retirement plan should not have more than five percent of it's own company in the plan.

It also makes sense that the goverment endorse 401k's, IRA's etc. If you get one dollar from working, then the goverment taxes that one dollar. But if you turn that same dollar into ten dollars through investment options which is what any retirement plan does, then they tax that ten dollars. This is what they are hoping for to help augment their social security program in the future. In other words, they are trying to relieve more financial burden from themselves to pay futuresocial security.

 

[Wimpy]

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In addition to a lack of diversification, the pensions were simply not funded with new money during the stock boom. The companies relied on the unrealized paper gains solely as their funding mechanism. When the stock bubble burst in March of 2000 the pensions were suddenly underfunded. They, like a lot of other investors, thought the stock rocket would never run out of fuel.

----

Grandma,

Gold has performed well for me over the years, but I believe silver has more relative potential. The gold/silver ratio has been hovering around the 60 to 1 ratio (1 ounce gold price divided by1 ounce of silver)for quite some time. During precious metal gold bull markets that ratio has a tendency to close toward a 16 to 1 ratio which means silver's price appreciates at a much faster rate. At today's current ratio my precious metal's allocation is 65% silver - 35% gold. As that ratio closes over the next few yearsmy allocation will favor goldto preserve the silver gains made.

 

[Dave M]

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In effect we had such a 'sumptuary law' in the 60's when the top tax rate was over 90%. See http://www.taxpolicycenter.org/TaxFacts/Tfdb/TFTemplate.cfm?DocID=117&Topic2id=30&Topic3id=38

My Dad said, "Why should I work for the government?" and knocked off building homes during the winter months, went to Florida instead. This led to the creation of a substantialestate, naturally. Now, he paid all the taxes on that wealthas he went along, so why should there be another tax laid on top? An 'estate tax' and a 'wealth tax' seem to me to be grossly unfair. Naturally.

Dave

 

[Wimpy]

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Dave M wrote:

Now, he paid all the taxes on that wealthas he went along, so why should there be another tax laid on top? An 'estate tax' and a 'wealth tax' seem to me to be grossly unfair.

It just goes to show us that the rules can be changed whether we talk taxes, social security, IRAs, SEPs…you name it. It is going to take more money than most realize to retire on because they haven’t factored in the rule change possibilities. If they get too carried away with their rule changes more and more people will supplement their retirement lifestyle with the Simmons Beautyrest Fund (mattress money) or follow the corporations, who’ve already left, to friendlier shores. That will leave the rest who remain here with a larger tax burden to shoulder.

The politicians give pork for votes and voters are looking for a free lunch. The problem is someone has to pay for the pork and the free lunch crowd (increasingly larger voter block) are not so inclined or endowed. You can’t squeeze blood out of a turnip and there are no laws requiring people to work…yet anyways.

The end result is that those individuals who have a large tax deferred nest egg will be inviting targets for the have-nots who are, as I said before, becoming a larger and larger voting block. The have-nots may not be able to directly get their hands in your pocket, but they can reach into their own pocket and find a friendly politician to do their thieving for them.

 

[Birchtree]

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Wimpy,

I've had my bullish eye on you for a few days now and I must admit I like your style.

Dennis-perma bull # 2

 

[grandma]

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Wimpy wrote:

The end result is that those individuals who have a large tax deferred nest egg will be inviting targets for the have-nots who are, as I said before, becoming a larger and larger voting block. The have-nots may not be able to directly get their hands in your pocket, but they can reach into their own pocket and find a friendly politician to do their thieving for them.

Recently I read a story about the `have-nots' & `the have some''s eating lunch w/the guy that had `more than enough.' Was that posted by one of you guys here? I think it would be good read again, maybe send it the chain e-mail route for the rest of the world to read - maybe even a politician or two.

 

[Wimpy]

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Congressman Ron Paul said:

"Just two years ago, Congress was poised to eliminate the hated estate tax permanently. Today, however, several U.S. Senators are using their own wasteful spending habits to justify retaining the tax. In the eyes of these Senators, budget deficits are never the result of too much spending, but rather too little taxing. They cannot imagine giving up even the tiny fraction of federal revenues raised by the estate tax. Why is a one percent revenue cut unthinkable to these lawmakers, while annual three or five percent spending increases are considered business as usual? To answer this question, look no further than the transportation bill passed last week in the Senate. It is perhaps the most pork-filled, wasteful appropriations bill passed in years. The bottom line is that spending money is what keeps these Senators in office. They won’t stop pork spending because the American voting public rewards them for it."

http://www.lewrockwell.com/paul/paul281.html

 

[Quips]

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Most people would like to get something for nothing, or something on the other guy's dime.

So whether it is the highway bill or the estate tax, most people want a free ride.

After a while most begin to expect it; new car rebates and their low financing are a good example of that.

 

[Sr]

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Quips wrote:

Most people would like to get something for nothing, or something on the other guy's dime.

So whether it is the highway bill or the estate tax, most people want a free ride.

After a while most begin to expect it; new car rebates and their low financing are a good example of that.

Mortgageinterest deductions, student loans rapayable for life, free nursing home care for elderly who arranged self bankruptcy, Aid to dependent child, Disability payments......... What are you talking about? Those are all my birth rights. Only those Bronx families and immigrants live on welfare and that too generations after generations,Cut the damn welfare to those free loaders!!!!

 

[Quips]

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Eh, what I was getting at is that there is a difference between envy and opportunism. Neither one is good, but you make a good point as well.

One person's entitlement is another's envy. Lots of luck, it becomes a matter of semantics. Pretty soon opportunism will be defined as some kind of entitlement program ... but that is what inside trading was about.