Billionaires and Roth IRAs: the case for tax reform

#101
#101
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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Yup. As a conservative I’m done defending billionaires. Reform the tax code now.
 
#109
#109
walkenvol said:
You do understand the gains have not and will not be taxed right?
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The principal is already taxed. That's the scheme. Your choice is deferring the tax through an IRA or paying the tax up front in a Roth. But of course this is the slippery slope a lot of us have been wary of. There would eventually come a time where the government was starved for cash and an easy target would be those with "too much success" in their Roth accounts. So we tax their already taxed money again, because this is how fairness works. And yes we told you we wouldn't do it but things have changed and well you didn't really make the money did you, I mean neither did we but these Stinger missiles aren't going to pay for themselves.
 
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#110
#110
DancingOutlaw said:
The principal is already taxed. That's the scheme. Your choice is deferring the tax through an IRA or paying the tax up front in a Roth. But of course this is the slippery slope a lot of us have been wary of. There would eventually come a time where the government was starved for cash and an easy target would be those with "too much success" in their Roth accounts. So we tax their already taxed money again, because this is how fairness works. And yes we told you we wouldn't do it but things have changed and well you didn't really make the money did you, I mean neither did we but these Stinger missiles aren't going to pay for themselves.
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What's wrong with taxing future gains within IRAs over $1 million at the rate applicable at the time the money is withdrawn just as with a 401k?

You can still put money in and trade with it. You just pay taxes when you withdraw on gains past $1 million.

Or $10 million if you'd prefer.
 
#111
#111
lawgator1 said:
What's wrong with taxing future gains within IRAs over $1 million at the rate applicable at the time the money is withdrawn just as with a 401k?

You can still put money in and trade with it. You just pay taxes when you withdraw on gains past $1 million.

Or $10 million if you'd prefer.
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Because the law says it won't be taxed? And that's what enticed people into these vehicles to begin with?

When you crack the door to get "the rich" it's a 100% guarantee you will eventually begin to sweep up those who were never the intended target. Either through government zealotry for more revenue or "forgetting" to index things (like AMT), there will be unintended consequences.

If you had taken your max Roth contribution in 1997 of $2,000 and bought the Amazon IPO at $18 a share, you'd have roughly $4.4M in your Roth today. Can anyone argue that the person who made that investment is a scammer who should be punished because he made a good call?
 
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#112
#112
lawgator1 said:
What's wrong with taxing future gains within IRAs over $1 million at the rate applicable at the time the money is withdrawn just as with a 401k?

You can still put money in and trade with it. You just pay taxes when you withdraw on gains past $1 million.

Or $10 million if you'd prefer.
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You should demonstrate a right with taxing future gains over a fixed amount before you ask what's wrong with it.
 
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#113
#113
DancingOutlaw said:
Because the law says it won't be taxed? And that's what enticed people into these vehicles to begin with?

When you crack the door to get "the rich" it's a 100% guarantee you will eventually begin to sweep up those who were never the intended target. Either through government zealotry for more revenue or "forgetting" to index things (like AMT), there will be unintended consequences.

If you had taken your max Roth contribution in 1997 of $2,000 and bought the Amazon IPO at $18 a share, you'd have roughly $4.4M in your Roth today. Can anyone argue that the person who made that investment is a scammer who should be punished because he made a good call?
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He's not punished. He simply paying taxes on a gain.

Talking about the future. Future gains over x should be taxed.
 
#114
#114
Bring on the wealth tax. It would be a great way to adjust for the easy money fiscal policy we've experienced pretty heavily since Obama. Assets have gone up and up, but wages haven't kept pace.
 
#115
#115
walkenvol said:
You do understand the gains have not and will not be taxed right?
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Not directly. That was the deal. It’s just flat wrong for the government to come back AFTER the fact and change the rules to penalize those that were the most successful at taking advantage of the lawful arrangement. Those gains are already being circulated in the economy and some day the account owner will be dead and that fortune will no longer be shielded from the wasteful government wealth grabbers.

Also, even though these specific gains are not taxed as income during the life of the account holder, that capital was used to create a business that generates millions of direct tax revenue for the government. PayPal has nearly 30,000 employees paying personal income taxes. PayPal itself has over $3 billion in profits which will be taxed when loss carry forwards have been used up that were accumulated during the developmental phase of the business if not already.

This proposed retroactive Roth rule change is motivated by pure envy, jealousy, and banking political capital from the ignorant and/or hateful liberal voting block.
 
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#117
#117
lawgator1 said:
He's not punished. He simply paying taxes on a gain.

Talking about the future. Future gains over x should be taxed.
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Why should it be taxed? Because you’re jealous? Let’s say you get your way and any gain over X is taxed. What is the rate? Where does the money go? General fund? Infrastructure? Social welfare?
 
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#120
#120
lawgator1 said:
What's wrong with taxing future gains within IRAs over $1 million at the rate applicable at the time the money is withdrawn just as with a 401k?

You can still put money in and trade with it. You just pay taxes when you withdraw on gains past $1 million.

Or $10 million if you'd prefer.
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The Roth IRA is money taxed before contributed. 401K contributions are tax sheltered on the front end and withdrawals on the back end are taxed as normal income. If you’re going to tax Roth IRA’s also on the back end, it’s double taxation and renders the IRA pointless. I don’t disagree with tightening up on certain loopholes for the ultra wealthy. But if we go down this road, it will once again hit the middle class savers worse than anyone.
 
#121
#121
lawgator1 said:
The gain was not. Taxing the gain.
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But that’s the point of how the investment vehicle was designed. To incentivize people to save for retirement, only taxing the money once, not twice. Even with these vehicles though, go look up the average retirement savings by age group. It’s so paltry it’s scary.
 
#122
#122
walkenvol said:
I believe the topic being discussed is should the money be returned to being tax eligible once an excessive amount has been accumulated. Uncle Sam can’t continue these crazy yearly budget deficits so a combination of less spending and more revenue is inevitable. I’d prefer they just reduce spending but we all know that alone won’t be enough. Where’s the best place to get the extra revenue?
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They dont reduce spending.
 
#123
#123
lawgator1 said:
What's wrong with taxing future gains within IRAs over $1 million at the rate applicable at the time the money is withdrawn just as with a 401k?

You can still put money in and trade with it. You just pay taxes when you withdraw on gains past $1 million.

Or $10 million if you'd prefer.
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There are options for that. He chose the legal option that doesnt do that.

Instead of taxing before or taxing after, you want to do both.
 
#125
#125
Vol737 said:
The Roth IRA is money taxed before contributed. 401K contributions are tax sheltered on the front end and withdrawals on the back end are taxed as normal income. If you’re going to tax Roth IRA’s also on the back end, it’s double taxation and renders the IRA pointless. I don’t disagree with tightening up on certain loopholes for the ultra wealthy. But if we go down this road, it will once again hit the middle class savers worse than anyone.
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I'm not talking about taxing what was put in as after tax dollars. I'm even allowing for some significant tax free gain.

But not tens or hundreds of millions of dollars. Too easy to use it as a shell to park insane gains and pretend whoopsie, I just got lucky.
 
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