Taxing wealth a way to tax Roth IRAs?

[joeea]

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Originally Posted by NW-Bound When money is needed, they may come up with a tax or some indirect method to claw back the SS if you have 401k/IRA/Roth. Taxmen can be very ingenious. I will not underestimate them.

We can imagine all sorts of thing, if we try hard enough.

[NW-Bound]

In the 1960 case of Flemming v. Nestor, Nestor sued the government when his SS benefit was terminated when he was deported for his involvement in the Communist Party.

The US Supreme Court ruled that

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... there is no contractual right to receive Social Security payments. Payments due under Social Security are not “property” rights and are not protected by the Takings Clause of the Fifth Amendment. The interest of a beneficiary of Social Security is protected only by the Due Process Clause. Under Due Process Clause analysis, government action is valid unless it is patently arbitrary and utterly lacking in rational justification. This provision of §202(n) is not irrational; it could have been justified by the desire to increase the purchasing power of those living in America, because those living abroad would not spend their payments here.

This means Congress could even choose to not provide SS to American expats if it wanted to.

Whether a law changing SS benefit is passed or not will depend on how many in the populace will be affected. Congressmen need people's votes after all. A law affecting a minority is more likely to get passed. And it would still be constitutional. The above case already set a precedent.


See: https://en.wikipedia.org/wiki/Flemming_v._Nestor.

[joeea]

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Originally Posted by NW-Bound In the 1960 case of Flemming v. Nestor, Nestor sued the government when his SS benefit was terminated when he was deported for his involvement in the Communist Party. The US Supreme Court ruled that This means Congress could even choose to not provide SS to American expats if it wanted to. Whether a law changing SS benefit is passed or not will depend on how many in the populace will be affected. Congressmen need people's votes after all. A law affecting a minority is more likely to get passed. And it would still be constitutional. The above case already set a precedent. See: https://en.wikipedia.org/wiki/Flemming_v._Nestor.

Yup, that 1954 amendment means there will surely be a flurry of new laws now.

[GrayHare]

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Originally Posted by JoeWras First step: have recipients report NW so it is known who needs it or not.

"Wait, you mean that's a real Picasso on my wall? Gosh, during all those tax years I thought the painting was a fake."

[ncbill]

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Originally Posted by explanade Well you can argue there have been tax laws which favored the rich the last 2-3 decades. In any event, there is inequality, which has been growing during the same time. Some people think it’s a problem hitch needs to b addressed, some don’t.

It's been a lot longer than that.

IIRC, U.S. federal capital gains rates dropped not long after WWII back to around 25% and have spent most of the time since bouncing between 15-20%.

Those now subject to the additional 3.8% surcharge are paying some of the highest rates historically post-WWII.

[marko]

Y'know....I'm almost 68 years old.
Gone through red presidents and congresses, blue presidents and congresses--and any mix thereof--high taxes, low taxes, high inflation, no inflation, new laws, rescinded laws coupled to dozens of scare tactics of our impending doom: "unless we.....".

I'm trying to think of one thing in all of that noise that has dramatically changed my life financially or my overall lifestyle for that matter. I'm still living the same life I always have and the life I had imagined for my future self back then.

I travel, eat out a few times a week, winter in Florida, drive nice cars and boats and live in a nice neighborhood; the bills get paid on time.

Nothing DC has come up with has forced me to modify my financials or made me change my direction of how I live and I really don't expect it to change any time soon. Do I pay a few bucks more in taxes for one thing or another? Sure, but overall, I don't see how it's affected me in any dramatic way.

I suspect that is because very little does in fact change despite all the noise and cage rattling. I'd say that what my local town mayor decides to do affects me a hundred times more than anything coming out of DC.

JMHO

[Chuckanut]

IMHO, one of the benefits of SS is that nearly everyone pays in and nearly everyone gets a benefit check. If you or some very close relative doesn't pay you don't get a check.

The payment inflection points already provide 'extra' benefits for low income people. The percent taxed points also provide some additional help for lower income folks. IMHO, adding more needs based criteria would destroy its credibility and, therefore, its public support.

[NW-Bound]

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Originally Posted by joeea Yup, that 1954 amendment means there will surely be a flurry of new laws now.

No need for a flurry. Just a law that hits the right spot is enough.

OK. Enough kidding around.

I personally do not worry about what will happen. I cannot really affect it. And whatever happens, I will do quite OK compared to other people.

I like to watch all this to see how it will unfold, but am not losing any sleep over it. I spend more time contemplating my next moves in trading the market, er, fortuitous rebalancing. It's something on which I can act unilaterally.

[Sunset]

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Originally Posted by gerntz Doesn't VAT only apply to those that spend? If so, it would just reduce spending. As they say, tax what you don't want much of: food, clothes, income, wealth, etc.

Sure one can avoid paying VAT taxes and Sales taxes by not buying anything, let your money sit unused.

This will cause a rise in the cash only, underground economy.

[joeea]

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Originally Posted by Chuckanut IMHO, one of the benefits of SS is that nearly everyone pays in and nearly everyone gets a benefit check. If you or some very close relative doesn't pay you don't get a check.

Are spouses very close relatives?

[joeea]

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Originally Posted by NW-Bound I personally do not worry about what will happen. I cannot really affect it. And whatever happens, I will do quite OK compared to other people.

Same here. While I watch what politicians do, and I always vote, for the most part I don't worry. I'm reasonably well covered almost without regard to what they do.

That said, I worry a lot more about my children and grandchildren and how they are affected by political moves.

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I like to watch all this to see how it will unfold, but am not losing any sleep over it.

yup

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I spend more time contemplating my next moves in trading the market, er, fortuitous rebalancing. It's something on which I can act unilaterally.

next moves in trading? Nope.

[Chuckanut]

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Originally Posted by joeea Are spouses very close relatives?

I would think so. Even ex spouses in some cases.

[Independent]

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Originally Posted by pb4uski +1 even though I would oppose a wealth tax in principle.... I presume that these people with $50 million+ or $1 billion+ pay income tax already... so they pay income tax on their income and then it gets taxed again becaue it is part of their wealth?

One study found that on estates of $100 million or more, 55% of the assets consisted of unrealized capital gains.

That capital income was not taxed during the owners lifetime, and, due to step up in basis, would not be taxed during the heirs lifetime.

As this forum's members age, we'll have more examples of people holding certain assets to take advantage of that.

[gerntz]

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Originally Posted by Montecfo Increasing the payroll tax as before.

That will go over big, especially with those paying mainly only payroll taxes. I mean, if it's that easy, why not do it now?

[gerntz]

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Originally Posted by Senator SS will always be able to pay. The money can be borrowed and printed.

And thus be worth less. But you're right, they can say they paid all the dollars whether they can buy anything or not.

[gerntz]

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Originally Posted by Sunset Sure one can avoid paying VAT taxes and Sales taxes by not buying anything, let your money sit unused. This will cause a rise in the cash only, underground economy.

Didn't say not buy anything, just less. Happens all the time when sales/luxury/VAT/wealth taxes are raised.

[Montecfo]

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Originally Posted by explanade Well you can argue there have been tax laws which favored the rich the last 2-3 decades. In any event, there is inequality, which has been growing during the same time. Some people think it’s a problem hitch needs to b addressed, some don’t.

I would have to hear that argument. Over the past 20 years millions of people have gone completely off the income tax rolls.

[Montecfo]

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Originally Posted by gerntz That will go over big, especially with those paying mainly only payroll taxes. I mean, if it's that easy, why not do it now?

Well bigger fish to fry, but I agree, they should.

[joeea]

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Originally Posted by Chuckanut I would think so. Even ex spouses in some cases.

So, "If you or some very close relative doesn't pay you don't get a check."

[YoungSaver]

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Originally Posted by marko Y'know....I'm almost 68 years old. Gone through red presidents and congresses, blue presidents and congresses--and any mix thereof--high taxes, low taxes, high inflation, no inflation, new laws, rescinded laws coupled to dozens of scare tactics of our impending doom: "unless we.....". I'm trying to think of one thing in all of that noise that has dramatically changed my life financially or my overall lifestyle for that matter. I'm still living the same life I always have and the life I had imagined for my future self back then. Nothing DC has come up with has forced me to modify my financials or made me change my direction of how I live and I really don't expect it to change any time soon.

Really?
401(k) didn't change anything for you? I'm much younger than you, but 401(k) has been the biggest financial change in my life since being of age to contribute to it.
Roth IRA was another big one for me.
Clinton's tax credits for college was huge to me.
I don't know the history of IRS Pub 502 (deducting medical expenses) but that one has been big to me.
HSA is another big one for me.
Obamacare?