In another class-warfare move, The Hill reports on the latest Obama gimmick: his yet-to-be-released budget will include a cap on IRAs and other retirement accounts.
Currently, there are no limitations on how much money can be in an IRA. The White House has a problem with that.
The senior administration official said that wealthy taxpayers can currently “accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving.”
The administration then proceeds to define their level of reasonable retirement: $205,000/year, or around $3 million. Tax-deferred retirement accounts -- like IRAs -- will be prohibited from containing more than that.
The government is just salivating over the thought of tax-deferred money just sitting around. By capping the amount allowed in such an account, it keep money from being deferred (hint: taxed now) so it can go directly in the government coffers. "The proposal would save around $9 billion over a decade, a senior administration official said, while also bringing more fairness to the tax code".
So, what's really going on?
$9 billion over a decade. That's $900 million in revenue a year for 10 years. When that amount is checked against the more than $1 trillion in deficit per year the last several years, the suggestion that capping retirement accounts is part of a grand plan to reduce the deficit is insulting.
It's not about deficit reduction. It's about class warfare and need. The White House cites this measure as a way to bring more "fairness" in the tax code. Fairness? Restricting any American taxpayer how much money they can save for retirement is not fair. Pre-determinging for any American taxpayer what is "needed to fund reasonable levels of retirement saving" is not fair.
They use the word need to get what they want. William Pitt the Younger sagely put it, “Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.”
So it's not about deficit reduction and it's not about any real fairness either. It is about a body politic with a rapacious appetite. First it determines your needs, and then goes after the wealthy because the wealthy have what it needs (money for more spending).
As I have written before, the question of additional taxes on the wealthy is really a liberty and equity issue, impinging on the very entrepreneurial environment that made our country great. At the heart of any monetary decisions should be free will, not free money (for the government).
In a free country such as ours, it is entirely my judgment as to whether or not I want to work hard and try to earn a lot of money (or not), and/or save my money (or not). It is unequivocally immoral that our government – or any government – should feel it has the place and authority to come along after I earned my success and basically declare that because I have done well for myself, I should have to pay more to that government. This is legal plunder.
I have right and the liberty to factor into my decision making process what the government states I must owe under law, and decide whether that amount and calculation would be amenable to my overall situation and goals. The government has no right to retroactively come along and declare that I must detract from my commitment to invest in my self, my retirement, or anything else, because it needs a greater revenue stream. Why should I, who have proven myself to be successful (according to the government) have to give my success over to people who have proven to grossly mismanage our country’s finances?
This is a true and concerted effort to keep the wealthy less wealthy. It a disincentive against saving and a punishment for success. Why bother to work hard, to be self-sufficient, if the government can potentially decide, willy-nilly, that it needs more money than you?
Crossposted at alanjoelny.com