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Taxable Impact in Withdrawal Policy
Old 06-11-2010, 02:11 PM   #41
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Taxable Impact in Withdrawal Policy

We did significant (for us) Roth conversions this and last year funded largely by inheritance money. Had tentatively planned that Roths would be there as last resort monies. How are other folks thinking of w/d strategy with taxable/IRA/Roth monies? Am now thinking of at least taking dividends from Roths each year beginning this year. Can see the end run coming on Roth tax advantages. See link below. Graetz has an article in this month's AARP. Sounds like his proposal would basically raise the zero tax bracket margin to $100K!

Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look - washingtonpost.com
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Old 06-11-2010, 04:19 PM   #42
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We did significant (for us) Roth conversions this and last year funded largely by inheritance money. Had tentatively planned that Roths would be there as last resort monies. How are other folks thinking of w/d strategy with taxable/IRA/Roth monies? Am now thinking of at least taking dividends from Roths each year beginning this year. Can see the end run coming on Roth tax advantages. See link below. Graetz has an article in this month's AARP. Sounds like his proposal would basically raise the zero tax bracket margin to $100K!

Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look - washingtonpost.com
Not sure I follow your point. I didn't see any reference to ROTH IRAs in the article.
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Old 06-11-2010, 04:26 PM   #43
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The way VAT would be implemented ( at least by Graetz ) would actually lessen income tax for all but highest earners. Ie, depending on your income needs, future advantage of income tax free Roth is greatly diminished.

"In his 2008 book, "100 Million Unnecessary Returns," Yale law professor Michael J. Graetz estimates that a VAT of 10 to 14 percent would raise enough money to exempt families earning less than $100,000 -- about 90 percent of households -- from the income tax and would lower rates for everyone else."
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Old 06-11-2010, 08:18 PM   #44
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I can't imagine a VAT implemented except to augment existing revenue in order to close the deficit. Exempting 90% of taxpayers from income tax doesn't seem likely to me.
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Old 06-11-2010, 08:28 PM   #45
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The way VAT would be implemented ( at least by Graetz ) would actually lessen income tax for all but highest earners. Ie, depending on your income needs, future advantage of income tax free Roth is greatly diminished.

"In his 2008 book, "100 Million Unnecessary Returns," Yale law professor Michael J. Graetz estimates that a VAT of 10 to 14 percent would raise enough money to exempt families earning less than $100,000 -- about 90 percent of households -- from the income tax and would lower rates for everyone else."
That doesn't speak to whether one would pay less tax or more tax. So what if income tax goes to zero when it is replaced by a higher VAT?
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Old 06-11-2010, 08:32 PM   #46
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That's the day when there will be a snowstorm in hell.
Be realistic----if they put on a VAT it will be in addition to the income tax.

Luckily, a VAT will require a change in the Constitution.
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Old 06-11-2010, 09:16 PM   #47
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That doesn't speak to whether one would pay less tax or more tax. So what if income tax goes to zero when it is replaced by a higher VAT?
i think the point was that "if income tax goes to zero" and "it is replaced by a higher VAT" the people who already paid income tax on their Roths will pay tax twice on it (income tax and the VAT when they spend it) as opposed to people with TIRAs, 401ks who will only pay the VAT.
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Old 06-11-2010, 09:18 PM   #48
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Luckily, a VAT will require a change in the Constitution.
please explain.
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Old 06-11-2010, 11:01 PM   #49
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please explain.
The Federal government does not have the Constitutional authority to levy a sales tax (or VAT, which is a form of sales tax).

Sec 8: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, ... all Duties, Imposts and Excises shall be uniform throughout the United States;

Sec 9: No capitation, or other direct, Tax shall be laid...
Modified by 16th amendment: The Congress shall have power to lay and collect taxes on incomes...

Nothing there about taxes on anything besides income.
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Old 06-12-2010, 01:13 AM   #50
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Nothing there about taxes on anything besides income.
and that is gonna require a change to the consitution to allow VAT? i hope you are right.
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Old 06-12-2010, 02:01 AM   #51
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The Federal government does not have the Constitutional authority to levy a sales tax (or VAT, which is a form of sales tax).

Sec 8: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, ... all Duties, Imposts and Excises shall be uniform throughout the United States;
I'm not following your line of thought. If Congress imposes a sales tax or VAT, and the same rate charged nationwide, how does that violate Section 8?

Quote:
Sec 9: No capitation, or other direct, Tax shall be laid...
I will leave it to the resident lawyers to tell us whether a sales tax or VAT is a direct tax or indirect, and content myself with pointing out that your quote from Section 9 is incomplete and gives the impression that there is a blanket prohibition on direct taxes. Actually, Section 9 says "No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken." It restricts Congress' power to impose direct taxes, but does not forbid them altogether.
Quote:
Modified by 16th amendment: The Congress shall have power to lay and collect taxes on incomes...

Nothing there about taxes on anything besides income.
True—there's nothing either pro or con.
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Old 06-12-2010, 03:38 AM   #52
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Originally Posted by rayvt View Post
The Federal government does not have the Constitutional authority to levy a sales tax (or VAT, which is a form of sales tax).

Sec 8: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, ... all Duties, Imposts and Excises shall be uniform throughout the United States;

Sec 9: No capitation, or other direct, Tax shall be laid...
Modified by 16th amendment: The Congress shall have power to lay and collect taxes on incomes...

Nothing there about taxes on anything besides income.
Since the feds already tax a number of items similar to a VAT... I do not see why they would need to change the constitution...

There is a tax on gas
There is a tax on phones
there is a tax on arrows
There is a tax on your plane ticket
Tax on alcohol
Tax on heavy trucks
sport fishing equipment
ozone depleting chemicals


Take a look... http://www.irs.gov/pub/irs-pdf/f720.pdf


All they have to do is increase the list of taxable items... and tax them the same all over the country

PS... the new health care bill is going to tax you on something you DO NOT buy... how do they get away with that looking at how you see the constitution...
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Old 06-12-2010, 09:37 AM   #53
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So if you use your Roth IRA withdrawal to buy gas, phones, arrows, plane tickets, alcohol, a heavy truck, fishing equipment and ozone depleting chemicals, you are already being taxed twice on your Roth. Bummer.
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