WSJ Retirement Section 12/11/06

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Originally Posted by LEX Confiscatory Socialists by any name are a true threat to those who responsibly saved and through personal effort have more than the 'less fortunate'. They gain power by reallocating the wealth of others to those who become their supporting political force. There is a real longer term asset preservation issue here IMHO. Besides inflation which is insidiously built into the system and functions as a surrogate asset seizure over time, the feds can and have found ways to take retirement assets, from double taxation to stealing it from your kids through the estate tax. You are not paranoid if it turns out to be true that they really are out to get you! Perhaps this is a good reason to hedge your in-country assets and keep assets in more than one political system. Maybe buy a flat in Lucern or Zug and get to know your local banker.

You guys should be blaming the current administration (GW 'Chimp' Bush) for the economic debt that we are racking up. They are the ones spending it! - Not future administrations that will have to Fix it.

[LEX]

I follow my own advice. I typically have done well by it.

Having international hedging means it takes several "confiscatory" political systems to evaporate all my assets. Typically this is low probability/high impact risk. Political risk mitigation is similar to Tax planning and is valid issue in asset preservation. I would suggest there is more, not less incentive for those IRA's to become subject to either indirect taxation or subesquent seizure in the next ten years. I am also mindfull this is not an issue that most need to concern themselves with as most domestic wealth is gone within one generation anyway. Do your own due dilligence.

[CCdaCE]

I agree, C-T, but "I didn't vote for 'em" and I don't feel there's much I can do about "monkey boy" ...and... I feel, we're gonna be "takin' fire", I just wanna know which to "aim the Claymore".

I know what I'm going to do (just like LEX said), just wondering what others' take is on the situation.

"Don't get me started" *wink*

Preach on LEX. It's those low probabilities multiplied by the high impact that wipe things out. I'm not at the point where I feel I need, or that it would be efficient, to have multitudes of investment vehicles in a wide array of currencies. ... but, I see your point. Heck, it's just a lousy $4K in a Roth. Seems like it's starting to add up, though.

-CC

[Bikerdude]

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Originally Posted by Cut-Throat You guys should be blaming the current administration (GW 'Chimp' Bush) for the economic debt that we are racking up. They are the ones spending it! - Not future administrations that will have to Fix it.

Yeah, reminds me of LB 'Ears' Johnson with the "Great Society" and Vietnam. Still reeling (no pun intended) from that one.

[brewer12345]

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Originally Posted by CCdaCE ... So, my question is... how are "they" gonna go about bleeding off any available funds from within Roth IRAs. I dutifully stick money in that honey pot, thinkin' it's virtually guaranteed that tax rates will be higher in 30+ years, though, all they've seem to do is go down in the past 30. Right? -CC

How about a national 15% sales tax?

[CCdaCE]

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Originally Posted by brewer12345 How about a national 15% sales tax?

Ding. ding. ding. We have a winner.

That'd be sweet, actually. Punish all the hoarding/consuming Americans.

Everyone'd argue it'd hurt/target the poor, though. I'm guessing it wouldn't pass, although I haven't heard or read much about the issue in the last six months.

-CC

[FIRE'd@51]

There's not a "snowball's chance in hell" of it even getting out of the Ways and Means Committee so long as the Democrats control Congress, unless it were in addition to the income tax. I'd give it a lower probability of passing than a flat tax.

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Originally Posted by CCdaCE Ding. ding. ding. We have a winner. That'd be sweet, actually. Punish all the hoarding/consuming Americans. Everyone'd argue it'd hurt/target the poor, though. I'm guessing it wouldn't pass, although I haven't heard or read much about the issue in the last six months. -CC

Why would you want this? You've saved your money and paid taxes on the income. Now you want to pay taxes again when you spend it?

I would like to see a Federal $5 a gallon gas tax though. That would start a conservation movement like you've never seen. Get the SUVs off the highways too. Good for the planet and we'd have plenty of gas for years to come!

[FIRE'd@51]

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Originally Posted by Cut-Throat Why would you want this? You've saved your money and paid taxes on the income. Now you want to pay taxes again when you spend it?

C-T, you bring up a very good point - it's something I have been thinking about since this whole issue of replacing the income tax with a national sales tax has come up. How do they do it in a way that is fair to the retired folks who have amassed a substantial amount of after-tax dollars? Those folks already paid high income taxes on their wages, and many, if not most, want (or may have to) consume a large portion of those dollars before they die. In addition, to raise the same amount of money to finance the government's current budget the tax would have to apply to everything - houses, health care, etc.

[Dawg52]

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Originally Posted by Cut-Throat I would like to see a Federal $5 a gallon gas tax though.

I just spit my coffee all over the computer screen. Where are the paper towels?

[dumpster56]

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Originally Posted by Cut-Throat Why would you want this? You've saved your money and paid taxes on the income. Now you want to pay taxes again when you spend it? I would like to see a Federal $5 a gallon gas tax though. That would start a conservation movement like you've never seen. Get the SUVs off the highways too. Good for the planet and we'd have plenty of gas for years to come!

Maybe if we had railroads in this country that actually worked.

[donheff]

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Originally Posted by CutThroat I would like to see a Federal $5 a gallon gas tax though.

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Originally Posted by DOG52 I just spit my coffee all over the computer screen. Where are the paper towels?

A lot of people freak out at the thought but if we had instituted a gas tax back in the 70s after the first OPEC crisis we would all be driving fuel efficient vehicles and we would not be as dependant on the middle east as we are now. Small, fuel efficient cars were in huge demand in the late 70s but they went the way of the Dodo when gas became cheaper than soda pop. National security minded folks should have championed this.

[CCdaCE]

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Originally Posted by Cut-Throat Why would you want this? You've saved your money and paid taxes on the income. Now you want to pay taxes again when you spend it? I would like to see a Federal $5 a gallon gas tax though. That would start a conservation movement like you've never seen. Get the SUVs off the highways too. Good for the planet and we'd have plenty of gas for years to come!

I wouldn't WANT a flat sales tax, but I'd prefer it to high property taxes, high income taxes and the like. I'd rather punish someone tax-wise for wanting a big screen/expensive vehicle/etc. vs. owning a house or making a decent income. That'd be my preference.

-CC

[Nords]

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Originally Posted by donheff A lot of people freak out at the thought but if we had instituted a gas tax back in the 70s after the first OPEC crisis we would all be driving fuel efficient vehicles and we would not be as dependant on the middle east as we are now.

Well, that certainly would have eliminated the gas lines-- and brought what little was left of the economy to a screeching crash!

Have we all forgotten what it was like during November 1973 - February 74? I was only 13 years old then but it left a pretty clear impression on me, and I don't think a $5/gallon gas tax would have been the sort of economic stimulus that was needed.

We're already less dependent on foreign oil today than we were 33 years ago, and the trend will continue (despite the multi-ton V8 Armada that almost ran me over today). Give it time.

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Originally Posted by Nords We're already less dependent on foreign oil today than we were 33 years ago, and the trend will continue (despite the multi-ton V8 Armada that almost ran me over today). Give it time.

Say What? - This is contrary to everything I've ever heard on the subject! - Do you have any graphs that illustrate your point?

The only trend I've ever heard about is we are more dependent on oil.


US Foreign Oil Dependency on Increase, say Experts
Michael Bowman
VOA, Washington
16 Oct 2003, 16:03 UTC

Thirty years ago, the United States faced an energy crisis as mostly-Muslim, oil-producing nations imposed an oil embargo, hoping to force a halt of U.S. support for Israel. Today, U.S. dependence on foreign oil is far greater than it was in the early 1970s. Panel of experts recently gathered in Washington to examine America's energy situation and its choices for the future.

Former Energy Secretary James Schlesinger says the 1973 oil embargo had a devastating short term effect on the United States, but an even costlier long term effect on OPEC nations that conspired to withhold fuel. In the years that followed, the United States built more fuel-efficient cars and sought alternate sources for oil. OPEC's market share fell and, by the mid-1980s, world oil prices collapsed.

"The Saudis did learn in that period that there was a need for stable prices, that there was a need to show that they were the dependable sources of supply," said Mr. Schlesinger, speaking at the Washington-based Heritage Foundation. "If they were not, other places in the world were discovered that could produce oil: the North Sea, West Africa. Not only that, but the world's appetite for oil could be curbed if prices were high enough."

But Mr. Schlesinger and other analysts contend that any progress the United States made in the 1970s and 80s towards stable energy supplies at reasonable prices is at risk.

"Our dependence [on foreign oil] has almost doubled since 1973," added Gal Luft, co-director of the Institute for the Analysis of Global Security. "In 1972, the United States imported 28 percent of its oil; today it imports 55 percent, and projections show that 25 years from now it will import 70 percent of its oil," he continued. "Our dependency is growing, and our dependency on Middle East oil is also growing. We will import 50 percent of our oil from the Middle East by 2025."

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Originally Posted by Nords Well, that certainly would have eliminated the gas lines-- and brought what little was left of the economy to a screeching crash! Have we all forgotten what it was like during November 1973 - February 74? I was only 13 years old then but it left a pretty clear impression on me, and I don't think a $5/gallon gas tax would have been the sort of economic stimulus that was needed. We're already less dependent on foreign oil today than we were 33 years ago, and the trend will continue (despite the multi-ton V8 Armada that almost ran me over today). Give it time.

You don't know the inventions that this would have fueled (pun intended) - I think we would have been much better off. We need to move our economy from an oil dependent one to a renewable energy one.

[mb]

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Originally Posted by Nords We're already less dependent on foreign oil today than we were 33 years ago, and the trend will continue (despite the multi-ton V8 Armada that almost ran me over today). Give it time.

You are usually pretty reliable Nords, but the above is completely wrong.

Since the mid-70s oil imports as a percent of consumption have increased by about 50% and oil imports in bbl/day have increased by about 100%.

And it is unlikely that the trend to a greater dependence on foreign oil will reverse. Even when the North Slope came on line it was only a small blip in the trend.

The recent Gulf discoveries will help some but more oil exporation in the US in not the answer.

MB

[Nords]

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Originally Posted by Cut-Throat Say What? - This is contrary to everything I've ever heard on the subject! - Do you have any graphs that illustrate your point?

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Originally Posted by mb You are usually pretty reliable Nords, but the above is completely wrong.

OK, guys, I'll go digging (so to speak). I'm sure there's enough weasel words on the subject to prove that we're all correct.

My point is that in 1973-4 the situation would've been helped by fiscal stimulus. The last thing we needed was the government stepping in with Smoot-Hawley tariffs higher taxes.

EDIT--
OK, I'm back. Here's one: http://www.businessweek.com/bwdaily/...tm?chan=search

"The history of oil spikes is a poor guide, in part because the country is less dependent on oil than it used to be. The U.S. uses only about half as much oil per dollar of inflation-adjusted output as it did in the early 1970s. Even since the last Gulf War, the economy's energy dependence has shrunk."

Of course the article also goes on thusly:
"If the conflict with Iraq is resolved within a few months -- a big if, to be sure -- oil prices are likely to drop below $30 a barrel by summer. Some experts even think an oil glut is possible. Oil-company analyst Frederick P. Leuffer of Bear, Stearns & Co. predicts oil will average $18 a barrel in the second half of 2003."

BTW, how 'bout if the next one of you armchair economists who wants to punish us with gas taxes decides to buy a photovoltaic array instead? Electricity bills at the Nords house have been running reliably under $40 (as low as $15) and I'm looking for another kilowatt or two of PV cells at under $4/watt (including shipping).

[unclemick]

Hmmmm

The way I heard it (no handy sources either) was that we import a lot more oil BUT the price has less of an immediate effect because of changes in the structure/mix of our economy since the 1970's.

heh heh heh heh - and no I can't remember where I read that??

[mb]

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Originally Posted by Cut-Throat I would like to see a Federal $5 a gallon gas tax though. That would start a conservation movement like you've never seen. Get the SUVs off the highways too. Good for the planet and we'd have plenty of gas for years to come!

Agree with C-T. A gas tax would:

- reduce oil imports
- reduce CO2 emissions
- encourage development of mass transit options
- encourage development of walkable\liveable neighborhoods rather than the drive to the mall culture

I would like to see something on the order of $3/gallon phased in at the rate of say $0.50 increase every 6 months.

MB