Posted on 02/02/2015 10:45:29 AM PST by abb
With the release of its 2016 spending blueprint Monday, the Obama White House officially signaled its intent to use retirement policy to raise taxes on the wealthiest Americans.
The proposed 10-year budget, which allots $4 trillion in spending for fiscal year 2016, will attempt to cap tax-deferred saving in 401(k) and Individual Retirement Accounts at about $3.4 million.
That amount of savings generates more than $200,000 of income annually in retirement when annuitized, an income stream that should be sufficient for most, according to the Obama administration’s rationale behind the proposal.
The vast majority of Americans would never feel the cap. In 2011, only one out of every 1,000 Americans had more than $3 million in their retirement accounts, according to the Employee Benefit Research Institute. That said, many in the industry oppose it, especially in light of concerns over rising interest rates.
“Politically, it is convenient to target people who have saved $3.4 million,” Klein said. “But the devil is in the details when you look at the impact on younger workers and the inevitability that interest rates will rise over the coming decades.”
The problem is that annuity prices vary with interest rates because insurance companies buy bonds to finance pay-outs. When bond yields are low, as they are now, annuities are more expensive. Right now a 10-year Treasury bond yield is just 2 percent. If it jumps to 5 percent (the rate in 2006), that $205,000 annual annuity would only cost $2.2 million. .
The cap is a relatively small gambit in the budget’s larger effort to raise revenues by increasing capital gains taxes, inheritance taxes, and taxes on foreign revenue streams of U.S. multinational companies. Related 13 things on the IRI’s regulatory agenda
A possibly overreaching fiduciary standard is just one of many items the organization will lobby on in the coming year.
The budget also purports to stimulate middle-class incomes with a series of spending initiatives and tax cuts.
New retirement regulations in the budget would also make it easier for workers to save for retirement through their employers by giving 30 million more workers access to IRAs in which they are automatically enrolled, according to a fact sheet published on the White House’s Office of Management and Budget site.
Yet
This is “foot in the door” stuff and needs to be stopped cold.
Send Obama’s Budget to Venezuela they need Toilet Paper
Every law intended to “soak the rich” winds up hitting the Middle Class the worst, see the A.M.T.
Only Congressmen who have signed over their accumulated wealth in excess of Obama’s $3.4 million cut-off will be allowed to vote “Approved” on this measure.
Congressional “donations” will be applied to paying down the National Debt - ONLY!
ONLY $200K a year?? But then how can Al Gore run all over the place in his private jet? Or make the payments on his seven houses? The Emperor is gonna get a nasty visit from Fat Al!
“At some point, you’ve made enough money...”
O Bama, I do nuh kin yah hin me purse.
Cap charitable contribution deductibility at 20 million lifetime, and watch the Left start screaming.
How will 0bama survive without that extra income? 0bama’s 2014 Palm Springs and Key Largo golf outings alone, cost $2,952,278.
And that's on top of the fact that Social Security payments are already disproportional to the amount paid in. If you compare two people, one who earns income at the SS cap and pays the absolute maximum SS tax throughout his career and one who earns and pays half as much, the higher earner would make 50% more in SS payments as opposed to 100% more if he was paid proportionally to his taxes paid.
Would anyone accept a savings account or investment paid non-proportionally like that? That disproportionality is either an undeserved tax on the high earner, or an unearned benefit for the lower earner.
And those are just two points. The disproportionality becomes worse as you go further down the scale.
I think it would be interesting to see at what income the benefit vs. tax curve matches the total payment ratio which would define the point where the retiree is paid his share, no more and no less.
How about an Obama Global Scam Initiative paralleling the Clinton Global Scam Initiative. World trips, fancy digs, golf vacations as charity trips just so long as you put the occasional squeeze on contributors in the 5th green.
why should the little people need any more than that to live out the rest of their lives?
Now, can we the people please see Obama’s post presidency income as a “speaker” and “board member” and
“visiting professor of ruminology” capped at the same amount!!!
Is Obama smart enough to run such a scam?
Does he have the initiative to set something like that up?
Clinton ha the smarts and, being a resourceful crook, had the initiative.
Obama, the child of affirmative action, has neither. And, his usefulness at an end, his handlers won't have any otivation to do it for him, either.
Yes. But then, income taxes are also “means tested.” The more you earn, the higher the tax rate.
Some Republicans would agree to that.
Add in inflation, and, voila! justice and fairness!
Just like the alternative minimum tax, originally set at 75K when few “rich” people made 75K.
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