Topic: Will the gov't confiscate IRAs? (Read 1922 times)

The comments section of the article contains a very well reasoned rebuttal to the article from William Burrows:

Do you not see that the huge cost of 12.4% of a worker’s salary makes it difficult for most to save beyond that, but moreover that so many in the future will receive only a fraction of the earned annuity value of their contributions. The problem is that the first generations into the system received huge returns on their contributions (as politicians bought their votes) paid for by ever increasing taxes on the young so that now, an “average worker (based on wage index) will not even receive a 1 to I return on his taxes (not including disability portion). For your information, I have made a lifetime study of Social Security, and can prove my numbers and will be glad to share my computer program.

Social Security was intended in its beginnings (1935 law) to be a pension program (largely because many private pensions were failing i
n the depression), not really a social insurance program (even though it is named Old Age and Survivors insurance—OASI; the D for disability came later in 1957). This principle has been maintained throughout the next 70 years , as SS was touted as the third leg of the retirement stool after savings and private pensions.

This was why President Roosevelt insisted that its funding be separated from regular Federal taxes, so that Americans would feel a vested interest in its continuation. It was always intended (until corrupted by Congress later) that benefits reflected (if not exactly proportional to) a “fair” annuity type basis the value of contributions.

The only “welfare” built into the system at first were 1) the first dollar was worth more than the last so that low income workers would receive a greater return and 2) There was no vesting so that those who died early would pay for those who lived longer than “average”.

The social insurance part is called SSI, a means tested supplement that is paid out of general funds, NOT social security taxes. It was added in 1973.

The life expectancy at birth is irrelevant for social security. What matters is life expectancy at age 65 which in 1940 was about 13.5 years (the man/woman differential was dropped years ago). Today it is about 18.5 years. That is 5 years. From this it can be justified that retirement may have a basis to go from 67 (current age for the 1960 cohort) to 70, EXCEPT for the fact that we have paid in so much more than earlier generations.

So now the numbers:

The average worker who retired in 1950 at age 65 and lived the average lifespan of 13.5 years after retirement received 17 times the annuity value of his and his employers taxes.

In 1960 it was about 14 years, 8x.

In 1970 it was about 15 years, 4x. (NOT including medicare tax, started in 1966) for this and all below).

In 1980 it was about 16 years, 2.3x.

In 1990 it was about 17 years, 1.2x.

In 2000 it was about 18 years,.9x.

In 2010 it is estimated at 19 years,.8x.

In 2020 under current law it will be about.6x.

I can support these numbers with detailed calculations based on the long bonds into which SS supposedly “invests”.

And these are average workers. Lower income workers often received stratospheric returns, often based on as little as 6 quarters of contributions. Maximum contribution workers receive significantly less than this.

As a worker who has paid in the maximum for nearly all his working life, I will get less than 40 cents on the dollar under current law at my retirement at age 66 and 2 months in 2021.

So here is the CHAIN LETTER PONZI fraud. In order to do provide earlier generations with huge unearned returns on their social security contributions, to buy their vote at the expense of those too young (or not even born) to vote, CONGRESS kept raising the tax rates and caps so that now those at the end of the chain letter will receive NEGATIVE returns.

This is simple fraud, corruption and politics. Our own government has defrauded us. Worse, the 2.5 trillion “trust” fund is also a fraud, filled with worthless IOU’s that must be presented to Congress, which will then have to raise taxes or borrow more money to honor them. This is the fault of President Reagan who should have insisted in the 1983 changes to SS that they invest in real, marketable treasury bonds. Instead, our money has been wasted.

I and most other late baby boomers, unlike our parents and grand-parents have a legitimate claim on our money. The annuity value of what I and my employers have already paid in (up to age 57) is over 700,000 dollars. This would have bought me a terrific private pension, many times what I will get with SS. I and most of my cohorts will fight with every ounce of strength to get what we (unlike those who went before us) have earned by our payments. I will not accept any reductions for higher income workers as we already are cheated by only being credited with 10 cents on the dollar for highest earnings.

If you are looking for the sneaky way the Government is trying to get people on board with confiscation, here is an article from Yahoo!, Daily Ticker, and the New York Times.

http://finance.yahoo.com/blogs/daily-ticker/america-retirement-system-failing-us-economist-153445894.html

The things to look at are 1) Who is making the case 2) What media outlets are covering it

The woman in the video is: Dr. Teresa Ghilarducci from the "The New School" School for Social Research.  Her degrees are from the super liberal (Communist) University of California, Berkeley.  She authored a book called "When I'm Sixty-Four: The Plot against Pensions and the Plan to Save Them" in which she strongly advocates mandatory participation in a government-run savings plan.

The New School was founded by "progressive" (Communist) academics in 1919.  It houses the "World Policy Institute" think tank.  This think tank promotes a socialist agenda which includes collectivism activities such as confiscating the 401K and IRA money for a new big government "pension plan".

All too often media outlets such as the New York Times will allow a "well respected Economist" to spew their pro-collectivist world view without providing any of the background related to that person.  You really need to understand their agenda and know the people being held up as "experts".

What? That is why the USA has such a large military.  If the creditors get too mouthy then the USA could just start an international incident or uprising in that nation.

In his defense, real estate property is largely immune from hyperinflation; but unfortunately not from property tax re-valuations.  By one path or another, every type of investment that is normally measured in currency is subject to the confiscation of value due to hyperinflation of that currency, although some paths to that end result are indirect.

If you have $100,000 in an IRA, and the value increases 10x, but the price of everyday goods increases 1000x, that isn't a hyperinflationary obliteration?

Wow, you really don't understand what we are talking about here, do you?

Is your only access to economic thought Paul Krugman, Vampire?

You can't really hyperinflate them.. If you have a house, you can't hyperinflate it. If I own a company, I will still own the same amount of the company. I have 0 cash in my account.

Of course they'll raid IRAs and other accounts, one way or another.

They'll either raid them directly, or hyperinflate them into oblivion, or enact some other scheme to confiscate your wealth. The U.S. economy is too far gone now, this sort of move is inevitable.

Yeah, more on this BROKE stuff:

http://www.youtube.com/watch?v=-Zqp7cuwmPQ

This scenario seems very believable. It's amazing what gov't will do when they run out of money - just about anything is more politically palatable than cutting off entitlements.

Just look at the municipalities that are going bankrupt... they wait until the last minute, and then finally cut all salaries to minimum wage. Funny thing is, the unions are complaining about the pay cuts, but the reality is that few people understand the meaning of BROKE.

I believe this process will begin with some type of "reduce Government spending" push.  This would get fiscal Conservatives all excited and put the big government Liberals on the defensive.  The next step would be to outline all the "savings" from the "cuts" but then the story would change to "and we will be forced to find more revenue".

This will lead into a grand compromise in which most parts of the federal government take 10% spending reductions but a long list of new revenue (taxes) will be proposed.  In that portion you will see either reductions on the limits for IRA and 401k contributions, forced acceptance of Treasuries in retirement accounts, a "new" retirement "pension" plan which would look great on paper would be a rehash of the Social Security system.  This would be explained as being required to "close the budget gap".

Once the taxes and such are passed the cuts will vanish and the process of slowly grabbing the IRA and 401k money will begin.  Anyone with a lot of money in these will be branded as "rich" or a 1%er and targeted for confiscation.

As the Government handouts for Welfare, Food Stamps, Social Security and the like start to get smaller and smaller, the voices will get louder to "take" the "stolen tax revenue" from the IRA and 401k people.

-Brim

The thing is I can't imagine this even being proposed in the U.S. It would have zero support from all quarters, most importantly the wealthy elites who really make the decisions won't allow it. Having said that, we are at the beginning of the end of western power. Who knows how an impoverished and weak America might act?

Its the same as confiscation. I can pull them out and transfer to an offshore brokerage account.

I believe what we will see in the United States related to IRA and 401K accounts would be the Government requiring all of these accounts to have 20% to 50% U.S. Treasuries.  This is how they would "confiscate" the money in them.  The U.S. Treasuries would only pay 0.5% return and inflation over time would take your value.

They don't have to pass a law demanding you give them the money.  They can just "help" you with a law giving you the "stability" of a better investment in your retirement accounts.  They will tell you the stock market is "too volatile" and "too corrupt" so you should trust the Government with your money.  LOL.

Easy as pie.

-Brim

A healthy economy is positive sum.

It is already happening in other parts of the world and is in the works already in the US only it will be called "austerity measures". Yes people do stand to win, the ones scooping up all the capital at firesafe prices, as well as everyone shorting those funds. The economy is a zero sum game, someone losing always means someone else winning, even if it means chopping your neighbors feet off so you appear taller. When it gets put down in the books you still look 4 inches taller.

http://www.humanevents.com/2010/10/08/new-lame-duck-threat-to-bailout-union-pensions/

And the government can't do this by just causing inflation?

As RodeoX said: not really much govt can do before we pull our funds out. And certainly that party would loose a lot of believers.

I don't look at that as a penalty since it will be the first taxes I pay on that money. Still I will loose about 30% I think. but 70% is better than losing possession of the account.
Not a great outcome, but if this were attempted we could play spoliator and bring them down with us.

How would they 'divest' without taking a huge tax penalty?  Either way, govco wins.