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Old 08-03-2013, 12:03 PM   #141
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Does the government really have access to the amount that you have in all your accounts? The amount in tax-deferred accounts, I guess, are reported.
I am not sure if the government knows about after-tax accounts as it stands. However, it is easy for them to know, or to demand all financial institutions to report it.

Currently, people who are on food stamps or some welfare programs are not allowed to have a certain amount in their checking account. From what I have read, this is enforced (I wonder what they can do about people who simply withdraw and deal in cash).

In countries that have asset-based taxes (in addition to income taxes), you have to report any personal collectibles, valuable objects such as rare paintings, antique furnitures, etc... In those countries, one expects that the easier targets like bank accounts will be counted first.

I am not saying the US SS and tax system will go this way, but some pols already start talking about that. And I find it alarming.
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Old 08-03-2013, 06:01 PM   #142
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Beware of any attempts to means-test SS benefits. This will divide & separate people in terms of their support of the program as it starts to more resemble a welfare program.

The current high levels of popular support for the SS program that we observe, as reported by Mulligans article in post #111 of this thread, would likely be a thing of the past a decade or so after means-testing were to being IMHO.

-gauss
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Old 08-03-2013, 06:34 PM   #143
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Beware of any attempts to means-test SS benefits. This will divide & separate people in terms of their support of the program as it starts to more resemble a welfare program.

The current high levels of popular support for the SS program that we observe, as reported by Mulligans article in post #111 of this thread, would likely be a thing of the past a decade or so after means-testing were to being IMHO.

-gauss
To boot there are two means tested features of Social Security right now. One is a means test based upon lifetime earnings. If you look at the benefit formula one finds that lower incomes recieve a greater percentage of their average earnings than higher incomes. 90% up to average earnings of 791/month, 32% between 792/month and 4768/month and 15% above 4769 to the ss limit. In addition if ones total income exceeds some sum, social security benefits are 85% taxable. The numbers are the average of the wage adjusted earnings for the highest 35 years of earnings.
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Old 08-03-2013, 07:29 PM   #144
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To boot there are two means tested features of Social Security right now. One is a means test based upon lifetime earnings. If you look at the benefit formula one finds that lower incomes recieve a greater percentage of their average earnings than higher incomes. 90% up to average earnings of 791/month, 32% between 792/month and 4768/month and 15% above 4769 to the ss limit. In addition if ones total income exceeds some sum, social security benefits are 85% taxable. The numbers are the average of the wage adjusted earnings for the highest 35 years of earnings.
Exactly what I was going to say. SS is already means tested.
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Old 08-03-2013, 07:43 PM   #145
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Yes. And that happened before the pols even talked out loud and actually used the word.

SS benefits are regressive. That is to be expected if we consider that it is a form of welfare. Many aspects of SS are welfare, for example benefits to young children, divorced spouse of retirees, etc... That welfare aspect is arguably desirable.

The taxing of SS can be viewed the same way as taxes on IRA and 401k distributions. Is there any reason why it should be different?

But now, when they say out loud "Means Testing", I wonder how soon I should draw down my IRA and 401k and convert them to lumps in my mattress.
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Old 08-03-2013, 08:17 PM   #146
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Yes. And that happened before the pols even talked out loud and actually used the word.

SS benefits are regressive. That is to be expected if we consider that it is a form of welfare. Many aspects of SS are welfare, for example benefits to young children, divorced spouse of retirees, etc... That welfare aspect is arguably desirable.

The taxing of SS can be viewed the same way as taxes on IRA and 401k distributions. Is there any reason why it should be different?

But now, when they say out loud "Means Testing", I wonder how soon I should draw down my IRA and 401k and convert them to lumps in my mattress.
I expect the ability of heirs to essentially reset the clock on Required Minimum Distributions to go away. Essentially the new idea would be that if you inherit an IRA/401k you take the originators RMDs (or at least the percentages) so that one can not postpone taxes more than one lifetime.
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Old 08-03-2013, 08:27 PM   #147
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If FIRECalc's most optimistic prediction comes true, that would mean that my children would quit work and instantly go into ER upon my demise (or rather my wife's demise as she most likely outlives me). Their earned income would be nearly totally taxed away.

Hmmm... I will think about hollowing out my mattress to get some cavities in there to hide my stash, so that the bumps will not bother my sleep.
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