Posted on | April 11, 2011 | 12 Comments
by Smitty (via Insty)
Mrs. The Other Smitty and I this year listened to the financial adviser and converted the modest Traditional IRA to a Roth. By making the optimal choice on what to do with the sudden profit, we managed not to get completely destroyed on income tax. The amount of money in question was not tremendous.
I, for one, am sick and tired of Congress treating the tax code with the malevolence of software virus writers, trying to come up with new ways to crash my wallet.
In return for little more than ordinary upfront taxes, Congress waived untold billions in future Treasury receipts. Then, too, Roths could be a drag on the U.S. economy. Since no withdrawals are required, assets can lie idle indefinitely.
For Roth holders, the accounts become a permanent, federally sanctioned tax shelter. For America, they’re a bit like toxic instruments on the nation’s books. Worse, Congress has them on steroids, and President Obama wants to up the dosage.
Those assets are private property. Letting them lie fallow is a perfectly rational act. If someone perceives the assets a drag, then their perception, not the tax code, needs tweaking.
“federally sanctioned tax shelter”? No, really: it’s what I’m putting away for a rainy day. You know: SAVING. That thing that wise people do.
“toxic instruments on the nation’s books”? How can prudent stewardship be seen as toxic by anyone rational?
Gerald E. Scorse concludes:
Whatever the answer for individuals, there’s little doubt that Roths are wrong for America. They’re Frankensteins, fated to wreak havoc. It’s time to retire Roth IRAs.
No, it’s time to kill the 16th Amendment and come up with a simpler mechanism for funding the government. If the federal government could be trusted not to turn the country into an ATM, then some form of flat tax might be interesting.
I, for one, favor billing the states after some manner, so that the federal government is driven toward a balanced budget without explicitly Amending the Constitution for such.
Meanwhile, on Twitter, a storm rages: