Billionaires and Roth IRAs: the case for tax reform

#53
#53
lawgator1 said:
https://www.propublica.org/article/...s-into-a-5-billion-dollar-tax-free-piggy-bank


This should make every American very angry. This is exactly what's wrong with our tax system. I am of the opinion it should no longer be run by Congress. As long as they themselves get insider deals, and as long as they are dependent on the generosity of those that do, the Congress cannot be trusted with the power to make the rules on taxation.

I'm open to alternatives. A constitutional amendment to tax all income, regardless of source, at a flat 10 %? No exemptions, deductions, no tricks or dodges. Or how about a pro rata share of the country's bills every year, plus a 30 year plan to pay off the debt, based on income? Would force Congress to be careful in its spending because taxes rise or fall every year based on what they outlay.

Bottom line is that the tax system is currently manipulated by those with enormous wealth so as to concentrate wealth even further and it needs to end.
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You can roll your 401k or other qualified money over to a Roth if you do choose…. You’ll pay the taxes on it now, but later all the growth will be tax free just like the billionaire you’re tattling on.
 
#54
#54
The only issue I have about Thiel (and I don't know the answer to this) - What is the proper valuation of the shares that he placed into the Roth in 1999?

From personal experience, the IRS will look pretty close at contribution/valuation of non public stock into a Roth IRA on audit. My spouse put a portion of the annual equity she received from her employer in a Roth. It's not easy to value equity in a non publicly traded company (she used most recent private equity valuation as a basis) and the IRS was OK with that upon audit.

When it comes to Thiel and some of the later private equity valuations of Paypal, he might have stuffed his Roth a little too much.
 
#56
#56
Theil did nothing wrong. But, I do believe in a flat tax at 12%, no deductions on all income except capital gains. That's already been taxed.
 
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#57
#57
The collective total of all 8 figure and up Roth IRAs isn’t going to be all that excessive. The whole point of the article is just to stir up hate and envy. The government could tax it at 100% and they’d burn through it in a matter of months.

This quote from the article tells me the author really has no clue what they’re writing about:

“Pay just fractions of a penny per share, a price low enough to buy huge numbers of shares.”
 
#58
#58
BigOrangeMojo said:
A 21 year old who puts $500 a month into a Roth IRA and averages a 10% annual return will have $4.3 million when they turn 66.

Is that too wealthy?
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No.

A 50 year old who puts in 2k one time and in 5 years has 300 million, tax free, somethings up.
 
#59
#59
lawgator1 said:
No.

A 50 year old who puts in 2k one time and in 5 years has 300 million, tax free, somethings up.
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For every Thiel there are hundreds if not thousands of people who did the same thing and the startup failed or never amounted to much. I don't think the Treasury owes them restitution anymore than Thiel owes the Treasury for following poorly thought out laws and regs.
 
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#61
#61
lawgator1 said:
No.

A 50 year old who puts in 2k one time and in 5 years has 300 million, tax free, somethings up.
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Creating huge wealth from modest beginnings isn’t shady. It’s the American dream and has happened over and over.

Changing the rules and taking it away from those that had the most success from the legislation is wrong. That wealth loses it’s tax free status at some point. The account can not exist in perpetuity (unless the smart guys figured out how to do that as well… and if they did, good for them.). I’m sure they created a lot of taxable income for an army of attorneys and accountants in the process. They’ve created businesses that generated jobs and huge amounts of other taxes.
 
#64
#64
This backdoor has been known for years and I am honestly shocked a lawyer, who should have a CPA, just learned about it.

The normal technic is to open a normal IRA that is a non qual and max it out and then simply transfer that non qual into a Roth a let it sit. Then rinse and repeat.

This is just a legal modification of this.

It’s smart. Sorry but it is.
 
#65
#65
lawgator1 said:
I don't think you read the article about how they are using Roth IRAs as a house within which to make insider deals amongst themselves and shield the profits. Its a cute game.

Rich A starts a company and sells Rich B stock worth $25 a share at initial offering of $.00001 a share. Rich B does so within the IRA. Company goes public and he makes tens if not hundreds of millions of dollars, completely tax free.

Rich B starts a company and Rich A buys shares. Same deal. He makes millions upon millions, tax free.

Some in Congress have proposed caps on the tax exempt status, to prevent this circle of fraud. But guess who keeps getting it squished.
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this isn't how investing in start ups works and maybe 1% of startups go public.

this 2 rich guys dealing with each other scenario you've painted is a complete fantasy
 
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#68
#68
lawgator1 said:
https://www.propublica.org/article/...s-into-a-5-billion-dollar-tax-free-piggy-bank


This should make every American very angry. This is exactly what's wrong with our tax system. I am of the opinion it should no longer be run by Congress. As long as they themselves get insider deals, and as long as they are dependent on the generosity of those that do, the Congress cannot be trusted with the power to make the rules on taxation.

I'm open to alternatives. A constitutional amendment to tax all income, regardless of source, at a flat 10 %? No exemptions, deductions, no tricks or dodges. Or how about a pro rata share of the country's bills every year, plus a 30 year plan to pay off the debt, based on income? Would force Congress to be careful in its spending because taxes rise or fall every year based on what they outlay.

Bottom line is that the tax system is currently manipulated by those with enormous wealth so as to concentrate wealth even further and it needs to end.
Click to expand...

You leftists never, talk about less spending. Its always how can we tax people and spend more. Foolishness
 
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#69
#69
Rasputin_Vol said:
I would prefer a flat sales tax. The government doesn't need to be profiting off of what I earn. However, if a flat 10% income tax would be enough to bring a liberal such as yourself to the table then I'm willing to make a deal.
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Isnt lg a leftist? More of socialist type. Thats what i gather from his posts.
 
#70
#70
This is the problem with so many Americans. Their jealousy against wealthy people is so bad. Yet they refuse to how badly our gov manages tax money. Envy and jealousy makes logical thought impossible
 
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#71
#71
lawgator1 said:
https://www.propublica.org/article/...s-into-a-5-billion-dollar-tax-free-piggy-bank


This should make every American very angry. This is exactly what's wrong with our tax system. I am of the opinion it should no longer be run by Congress. As long as they themselves get insider deals, and as long as they are dependent on the generosity of those that do, the Congress cannot be trusted with the power to make the rules on taxation.

I'm open to alternatives. A constitutional amendment to tax all income, regardless of source, at a flat 10 %? No exemptions, deductions, no tricks or dodges. Or how about a pro rata share of the country's bills every year, plus a 30 year plan to pay off the debt, based on income? Would force Congress to be careful in its spending because taxes rise or fall every year based on what they outlay.

Bottom line is that the tax system is currently manipulated by those with enormous wealth so as to concentrate wealth even further and it needs to end.
Click to expand...

Similar concept to the proposed Flat Tax? Except it was based on purchases. Spend money, pay more taxes and it applied to everything, as you mentioned, no exclusions. By a car, pack of twinkies or a house and pay the tax. But yeah, I can get on board with this. Of course, some are going to complain that it hits the poor disproportionately, but I don't agree. Everyone should pay in and have a stake in it.
 
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#73
#73
Volaholic320 said:
This is the problem with so many Americans. Their jealousy against wealthy people is so bad. Yet they refuse to how badly our gov manages tax money. Envy and jealousy makes logical thought impossible
Click to expand...

They never account for envy when they talk about greed on the other side.
 
#74
#74
GroverCleveland said:
Similar concept to the proposed Flat Tax? Except it was based on purchases. Spend money, pay more taxes and it applied to everything, as you mentioned, no exclusions. By a car, pack of twinkies or a house and pay the tax. But yeah, I can get on board with this. Of course, some are going to complain that it hits the poor disproportionately, but I don't agree. Everyone should pay in and have a stake in it.
Click to expand...

Everybody needs to pay something. That is the problem right now in a nutshell. You pay nothing, you should not be able to vote for something.
 
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#75
#75
NEO said:
This backdoor has been known for years and I am honestly shocked a lawyer, who should have a CPA, just learned about it.

The normal technic is to open a normal IRA that is a non qual and max it out and then simply transfer that non qual into a Roth a let it sit. Then rinse and repeat.

This is just a legal modification of this.

It’s smart. Sorry but it is.
Click to expand...

Thiel didnt even use the backdoor feature. His income was low enough in 1999 to use the front door.

The only question is the valuation of the Founder's shares he contributed to the Roth in 1999.
 
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