Obama to cap tax-preferred retirement accts to $3MM

[stahleyp]

aren't you guys getting a little ahead of yourselves here? I mean, doesn't this still have to get through Congress and everything?

 

Absolutely. You're right.

 

Let me change my quote to- "Basically you may get screwed"

 

Okay, now you are a tease.

 

 

;D

[ERICOPOLY]

However, our disagreement did start over a statement by me that is still 100% accurate.  The context of my post was in regards to the IRA's being tax breaks.  Investment income earned in a ROTH IRA is a 100% tax credit.  Just because the conversions rules are crap doesn't change that.  You didn't have to convert and that is not the only way to contribute.

 

The thing is, I only converted the IRA to Roth IRA a few years ago -- literally I finished completing it in 2010.

 

I have unrealized gains in the account right now.  Those are tax-free normally if I suddenly die.

 

Instead if I die right now, they get taxed as income.  So instead of being completely tax free (from the step-up in basis), they become taxed at the worst possible rate -- income tax rate.  Plus the gains I've made in the account and actually have realized in the days since conversion, those would normally have been taxed at low dividend tax rates and reduced capital gains tax rate.  Instead, now they all get taxed as income.  So it's really, really crappy.  Normally for example people in a divorce can split assets without being assessed taxes for unrealized gains -- not with a RothIRA, it all gets assessed as income tax even if you were to remove appreciated assets in-kind (without selling them).

 

Then of course while you think this is a great tax shelter, and generally it is, once your RothIRA gets really big it sort of starts to become fair again.  My taxable estate is now high enough to trigger estate taxes (8 figures).  I can't move any of the RothIRA assets into a trust where they would appreciate outside of my taxable estate.  So any gains I make there going forward are going to be fully hit by estate taxes, unless I leave the country.  Anything I try to gift early to my children would be hit with the early withdrawal penalty as well as income tax.

 

So that's something people don't realize -- RothIRAs aren't quite as tax-free as they look considering that you wind up paying that massive estate tax rate that you could otherwise avoid.  And if that tax rate is 45%, then I will reiterate my belief that these are not the 100% tax credit vehicles that you claim them to be -- because I'm now paying a 45% estate tax on the RothIRA assets, whereas instead people typically grow the money in a taxable account outside of their taxable estate (for example, in a trust).

 

now, Obama will wind up being penny-wise and pound-foolish if he never sees those estate taxes.  I'm not bluffing -- the deciding factor of winding up moving to California last year instead of Australia was the RothIRA issue where Australia was planning to tax it as an offshore trust (taxing gains every year as if they were withdrawn from the account).

 

So we're not held back by anything now -- I'm an Australian dual citizen and was quite serious last year about leaving.  The future estate taxes, the money I spend to fund my living in the US economy -- buh bye.  First, we need to get the kids through Montecito Union Elementary School which we're now committed to.  So about 7 more years here first.

[valuecfa]

 

So that's something people don't realize -- RothIRAs aren't quite as tax-free as they look considering that you wind up paying that massive estate tax rate that you could otherwise avoid.  And if that tax rate is 45%, then I will reiterate my belief that these are not the 100% tax credit vehicles that you claim them to be -- because I'm now paying a 45% estate tax on the RothIRA assets, whereas instead people typically grow the money in a taxable account outside of their taxable estate (for example, in a trust).

 

I'm not arguing you like you like the discussion you had with the other fellow, but one of my best friends is an estate planning attorney and some of it has rubbed off. I also have a trust (though not as large as yours) and have spent some time researching the topic...i find it kind of interesting. So, i'm trying to understand your thinking here.

 

Regardless of what vehicle you choose, roth ira, traditional ira, regular brokerage...if you are over the estate tax exemption limit then you owe estate taxes on those assets. The Roth IRA is subject to federal estate tax just like any other asset held at death. Assets used to pay tax on a conversion to a Roth IRA reduce the owner’s taxable estate.

 

Perhaps you are just talking about if the proposal passes, which changes everything in your circumstance, being over $3 million in an IRA. Then, yes, that would change your specific circumstance...since you paid the conversion tax upfront (and don't have that money paid for conversion compounding anymore). And further, you would not have it grow tax free anymore in its entirety if the IRA is is over $3 million. And on top of that you would pay estate taxes over the exemption limit (but estate taxes would be the case regardless of conversion or whatever vehicle the assets are in).

 

For most people that never attain $3 million in Roth IRA assets, and IF the terms don't change again at some point in the future, then the Roth IRA is brilliant.

 

Also, by naming a trust as the beneficiary, it will bypass your estate. But it will still be subject to estate taxes (just like a traditional or any other asset type) if you are over the $10.5 million exemption, if married and have an AB trust. Given your large asset base you might consider setting up an ILIT as well, and as you already mentioned a Crummey Trust would be beneficial.

[ERICOPOLY]

 

So that's something people don't realize -- RothIRAs aren't quite as tax-free as they look considering that you wind up paying that massive estate tax rate that you could otherwise avoid.  And if that tax rate is 45%, then I will reiterate my belief that these are not the 100% tax credit vehicles that you claim them to be -- because I'm now paying a 45% estate tax on the RothIRA assets, whereas instead people typically grow the money in a taxable account outside of their taxable estate (for example, in a trust).

 

I'm not arguing you like you like the discussion you had with the other fellow, but one of my best friends is an estate planning attorney and some of it has rubbed off. I also have a trust (though not as large as yours) and have spent some time researching the topic...i find it kind of interesting. So, i'm trying to understand your thinking here.

 

Regardless of what vehicle you choose, roth ira, traditional ira, regular brokerage...if you are over the estate tax exemption limit then you owe estate taxes on those assets. The Roth IRA is subject to federal estate tax just like any other asset held at death. Assets used to pay tax on a conversion to a Roth IRA reduce the owner’s taxable estate.

 

Perhaps you are just talking about if the proposal passes, which changes everything in your circumstance, being over $3 million in an IRA. Then, yes, that would change your specific circumstance...since you paid the conversion tax upfront (and don't have that money paid for conversion compounding anymore). And further, you would not have it grow tax free anymore in its entirety if the IRA is is over $3 million. And on top of that you would pay estate taxes over the exemption limit (but estate taxes would be the case regardless of conversion or whatever vehicle the assets are in).

 

For most people that never attain $3 million in Roth IRA assets, and IF the terms don't change again at some point in the future, then the Roth IRA is brilliant.

 

Also, by naming a trust as the beneficiary, it will bypass your estate. But it will still be subject to estate taxes (just like a traditional or any other asset type) if you are over the $10.5 million exemption, if married and have an AB trust. Given your large asset base you might consider setting up an ILIT as well, and as you already mentioned a Crummey Trust would be beneficial.

 

What you say is all true.

 

I didn't explain myself clearly enough to be understood.

 

Today, I'm in "somewhat" of a pinch because we have just enough taxable brokerage assets to both purchase a home and carry ourselves until we reach 59.5.  So we need every penny we have and can't gift any to the children.

 

Now, if my entire net worth were in my taxable brokerage, then I could easily afford to give them $1m for the Crummy Trusts, and my wife could do the same (I think).  So we can gift them that amount upfront without triggering gift taxes, and then on top of that we can gift them each about $26,000 per year.  We have two kids.

 

Now, in 50 years that $1m (from each of us) and that $26,000 per year (from each of us) will be worth potentially a hell of a lot.  And it will be growing outside of our taxable estates.  So all the gains on those gifts made today would completely avoid the estate tax, even though the trusts would be paying taxes on gains along the way (if any gains... I might allocate assets to things like Berkshire that are tax-efficient).

 

Instead, the money grows in my RothIRA where we'll get slaughtered on estate taxes -- 45% tax rate or something and it could easily be much higher in the future.

 

 

The RothIRA eliminates some taxes, but it opens for me this humongous can of worms called the estate tax.

 

Plus, look up GRATs (Grantor Retained Annuity Trusts).  They are a vehicle where you can shove all of your assets during market bottoms and where all the gains in the next year or two pass on to your heirs estate-tax free (the appreciation happens outside of the estate).  But then you get back all the money you put in (except for the gains!).  You can't take advantage of GRATs with RothIRAs.

[valuecfa]

 

So that's something people don't realize -- RothIRAs aren't quite as tax-free as they look considering that you wind up paying that massive estate tax rate that you could otherwise avoid.  And if that tax rate is 45%, then I will reiterate my belief that these are not the 100% tax credit vehicles that you claim them to be -- because I'm now paying a 45% estate tax on the RothIRA assets, whereas instead people typically grow the money in a taxable account outside of their taxable estate (for example, in a trust).

 

I'm not arguing you like you like the discussion you had with the other fellow, but one of my best friends is an estate planning attorney and some of it has rubbed off. I also have a trust (though not as large as yours) and have spent some time researching the topic...i find it kind of interesting. So, i'm trying to understand your thinking here.

 

Regardless of what vehicle you choose, roth ira, traditional ira, regular brokerage...if you are over the estate tax exemption limit then you owe estate taxes on those assets. The Roth IRA is subject to federal estate tax just like any other asset held at death. Assets used to pay tax on a conversion to a Roth IRA reduce the owner’s taxable estate.

 

Perhaps you are just talking about if the proposal passes, which changes everything in your circumstance, being over $3 million in an IRA. Then, yes, that would change your specific circumstance...since you paid the conversion tax upfront (and don't have that money paid for conversion compounding anymore). And further, you would not have it grow tax free anymore in its entirety if the IRA is is over $3 million. And on top of that you would pay estate taxes over the exemption limit (but estate taxes would be the case regardless of conversion or whatever vehicle the assets are in).

 

For most people that never attain $3 million in Roth IRA assets, and IF the terms don't change again at some point in the future, then the Roth IRA is brilliant.

 

Also, by naming a trust as the beneficiary, it will bypass your estate. But it will still be subject to estate taxes (just like a traditional or any other asset type) if you are over the $10.5 million exemption, if married and have an AB trust. Given your large asset base you might consider setting up an ILIT as well, and as you already mentioned a Crummey Trust would be beneficial.

 

What you say is all true.

 

I didn't explain myself clearly enough to be understood.

 

Today, I'm in "somewhat" of a pinch because we have just enough taxable brokerage assets to both purchase a home and carry ourselves until we reach 59.5.  So we need every penny we have and can't gift any to the children.

 

Now, if my entire net worth were in my taxable brokerage, then I could easily afford to give them $1m for the Crummy Trusts, and my wife could do the same (I think).  So we can gift them that amount upfront without triggering gift taxes, and then on top of that we can gift them each about $26,000 per year.  We have two kids.

 

Now, in 50 years that $1m (from each of us) and that $26,000 per year (from each of us) will be worth potentially a hell of a lot.  And it will be growing outside of our taxable estates.  So all the gains on those gifts made today would completely avoid the estate tax, even though the trusts would be paying taxes on gains along the way (if any gains... I might allocate assets to things like Berkshire that are tax-efficient).

 

Instead, the money grows in my RothIRA where we'll get slaughtered on estate taxes -- 45% tax rate or something and it could easily be much higher in the future.

 

 

The RothIRA eliminates some taxes, but it opens for me this humongous can of worms called the estate tax.

 

Plus, look up GRATs (Grantor Retained Annuity Trusts).  They are a vehicle where you can shove all of your assets during market bottoms and where all the gains in the next year or two pass on to your heirs estate-tax free (the appreciation happens outside of the estate).  But then you get back all the money you put in (except for the gains!).  You can't take advantage of GRATs with RothIRAs.

 

I hope i have this problem someday.  :)

[wescobrk]

This is a message from Obama that he is unhappy with anyone making more than 120k a year (that line about the government determining what is reasonable).

This does absolutely nothing towards reducing the deficit. 9 billion over 10 years? We have over 75 trillion in liabilities and it is all from Medicare, Medicaid and ss.

Obama said in the most recent debate that republicans (Romney) is against PBS because it raises virtually nothing rather it was more of a message of values.

This is the same thing. This is Obama and him communicating a message that anything above 120k or 200k if you are single about it being unfair that they have that amount.

I used to think he has been mostly reasonable but this truly is a dick move as another poster communicated.

[valuecfa]

This is a message from Obama that he is unhappy with anyone making more than 120k a year (that line about the government determining what is reasonable).

This does absolutely nothing towards reducing the deficit. 9 billion over 10 years? We have over 75 trillion in liabilities and it is all from Medicare, Medicaid and ss.

Obama said in the most recent debate that republicans (Romney) is against PBS because it raises virtually nothing rather it was more of a message of values.

This is the same thing. This is Obama and him communicating a message that anything above 120k or 200k if you are single about it being unfair that they have that amount.

I used to think he has been mostly reasonable but this truly is a dick move as another poster communicated.

 

No doubt that this particular "dick move" is an Obama administration proposal. And i agree it is a dick move.

 

However, I'm fairly certain that regardless of what party is in power in the future more Austerity is coming. Be it in the form of higher taxes, reduced benefits/entitlements, reduced govt spending on public services, inflation, and other more direct means of confiscating ones wealth. Depending on which political party is in power at the time, will determine who is the winner and who is the loser. Point is there will still be a winner and still be a loser regardless of who is in charge. With such a large deficit, the money has to come from somewhere.

 

 

[ERICOPOLY]

I find it interesting that the free step-up in cost basis isn't being attacked first.

 

Buffett has like $40+b in unrealized capital gains on his Berkshire stock -- it will all be tax-free capital gains when he dies.

 

At the new 20% capital gains tax rate + Obamacare surtax that's practically the entire $9b right there. 

 

So instead, they go after people with $3+m accounts that haven't yet seen them through the rest of their lives.

 

Will $3m be enough if I live to beyond 100 years?

[Guest valueInv]

I find it interesting that the free step-up in cost basis isn't being attacked first.

 

Buffett has like $40+b in unrealized capital gains on his Berkshire stock -- it will all be tax-free capital gains when he dies.

 

At the new 20% capital gains tax rate + Obamacare surtax that's practically the entire $9b right there. 

 

So instead, they go after people with $3+m accounts that haven't yet seen them through the rest of their lives.

 

Will $3m be enough if I live to beyond 100 years?

 

Isn't most of Buffet's gains going to charity?

[kevin4u2]

We have over 75 trillion in liabilities and it is all from Medicare, Medicaid and ss.

 

Is this true?  Everyone throws around these huge liabilities as if they are fact. 

 

The government does not have liabilities like you or me.  IF the money isn't there, the money will not be paid.  It's as simple as that.  They can change the rules however they like, unlike the rest of us.  That is what this thread is all about. 

 

So much for freedom... in order to have freedom (and liberty) you need personal responsibility.  Personal Responsibility is something the government, schools, and the socialist are committed to eliminating.   

[Cardboard]

"So much for freedom... in order to have freedom (and liberty) you need personal responsibility.  Personal Responsibility is something the government, schools, and the socialist are committed to eliminating."

 

The question is why are they so committed to doing this or to this ideology which has failed time and time again and is so illogical? To consolidate power?

 

Regarding schools, I have heard a few years ago that some of them wanted to eliminate scores since it was creating "discrimination" for the students having lower marks!!! So basically give a free pass to everyone! Where are left the incentives to perform, to learn, to be proud of yourself and of your achievements? I can understand that some want every one to be included and happy, but life just does not work that easily.

 

Cardboard 

[ERICOPOLY]

I find it interesting that the free step-up in cost basis isn't being attacked first.

 

Buffett has like $40+b in unrealized capital gains on his Berkshire stock -- it will all be tax-free capital gains when he dies.

 

At the new 20% capital gains tax rate + Obamacare surtax that's practically the entire $9b right there. 

 

So instead, they go after people with $3+m accounts that haven't yet seen them through the rest of their lives.

 

Will $3m be enough if I live to beyond 100 years?

 

Isn't most of Buffet's gains going to charity?

 

That's true in his case today, and I don't want the government to get Bill & Melinda's foundation gift.  However if he changes his mind and chooses to keep it all for his family, that tax would be forgiven.  He hasn't yet given it all even though it sounds like a foregone conclusion.

 

But if you go down the list on the giving pledge, there are a lot of folks on there who will get their capital gains tax free (on the money that isn't being given).  And then of course there's everyone who isn't giving at all.

 

You don't really know what's going to become of my RothIRA in the end -- maybe I too will be leaving it all the charity.  Buffett didn't decide to announce his giveaway plan until twice my age.  He wanted to compound it before giving.  So taking a swipe at my money today... isn't that the same thing as taking a swipe at Buffett when he was younger?  So the charity argument you are right about in Buffett's case, but people die all the time with large amounts of capital gains that are forgiven.

 

[Guest longinvestor]

This is a message from Obama that he is unhappy with anyone making more than 120k a year (that line about the government determining what is reasonable).

This does absolutely nothing towards reducing the deficit. 9 billion over 10 years? We have over 75 trillion in liabilities and it is all from Medicare, Medicaid and ss.

Obama said in the most recent debate that republicans (Romney) is against PBS because it raises virtually nothing rather it was more of a message of values.

This is the same thing. This is Obama and him communicating a message that anything above 120k or 200k if you are single about it being unfair that they have that amount.

I used to think he has been mostly reasonable but this truly is a dick move as another poster communicated.

 

No doubt that this particular "dick move" is an Obama administration proposal. And i agree it is a dick move.

 

However, I'm fairly certain that regardless of what party is in power in the future more Austerity is coming. Be it in the form of higher taxes, reduced benefits/entitlements, reduced govt spending on public services, inflation, and other more direct means of confiscating ones wealth. Depending on which political party is in power at the time, will determine who is the winner and who is the loser. Point is there will still be a winner and still be a loser regardless of who is in charge. With such a large deficit, the money has to come from somewhere.

 

 

+1

 

Without incremental revenues, the deficit is not going anywhere. Everyone will end up being pi$$ed about something, they have to put their hands into every bucket there is. 

 

 

 

 

 

 

 

 

[ERICOPOLY]

Next up, somebody will propose mark-to-market accounting annually on all assets.  Elimination of deferral of capital gains.  Taxes due each year if your assets have appreciated. 

 

Really an IRA is a just a tax-deferral vehicle.  So if Obama's goal is to eliminate tax-deferral, then all is fair in love and war.

 

 

And if he is not against tax deferral, but merely just wants big IRA money to be hit annually on the realized capital gains, dividends, and interest, then this won't be hard for him to implement.  You just need a second type of IRA account called the "SweepIRA" account.  That account is one where taxes are due on dividends, interest, and realized capital gains.  But there would still be the penalty for early withdrawal before 59.5.  So that's the account where I would buy stocks like Berkshire and sit on them.

 

Whenever the assets in the main IRA account exceed $3 at year's end, the excess gets transferred to the "SweepIRA" account.

 

[ERICOPOLY]

Given your large asset base you might consider setting up an ILIT as well

 

Shouldn't I be concerned that soon after I set up an ILIT and have invested sums into the purchased insurance premiums, Obama will just change the law such that the insurance proceeds would be subject to full estate taxation for individuals like myself worth more than $3m?

 

How do I trust that any of this stuff won't shift under my feet after I've already spent money on them?  Like, for example, when I settled the tax bill early on my IRA?

[Cardboard]

"Be it in the form of higher taxes, reduced benefits/entitlements, reduced govt spending on public services, inflation, and other more direct means of confiscating ones wealth."

 

That is true, but I think that the way it is managed now or to only get money from the wealthier that this will lead to a very large power shift from countries that have very generous entitlement programs to those that have less or with better controls in place. It is very clear at this point, to me anyway, that entitlements are the root cause of most if not all of our fiscal and budget issues. These programs eliminate fear for individuals since they can always rely on that safety net for food, shelter, healthcare, etc. While it appears to be a good and charitable thing, this leads to higher costs overall, lack of incentives, abuse and lack of productivity which in the end is not without consequences in a competitive world. And once people feel entitled to something, it is really hard to take it back and near impossible with the power of votes.

 

Unless higher taxes/confiscation is done in a synchronized way on a global basis, which I think is impossible, the rich will move to places where their capital is sought after to create enterprises and invest and not to subsidize people who constantly blame them for all their woes. They will even accept a one time tax hit to get out. These countries will enjoy higher currencies, higher standard of living, less unemployment while the other ones will be in terminal decline. This takes a long time to play out or a few decades, but will be the end result.

 

Cardboard       

[woltac]

"Be it in the form of higher taxes, reduced benefits/entitlements, reduced govt spending on public services, inflation, and other more direct means of confiscating ones wealth."

 

That is true, but I think that the way it is managed now or to only get money from the wealthier that this will lead to a very large power shift from countries that have very generous entitlement programs to those that have less or with better controls in place. It is very clear at this point, to me anyway, that entitlements are the root cause of most if not all of our fiscal and budget issues. These programs eliminate fear for individuals since they can always rely on that safety net for food, shelter, healthcare, etc. While it appears to be a good and charitable thing, this leads to higher costs overall, lack of incentives, abuse and lack of productivity which in the end is not without consequences in a competitive world. And once people feel entitled to something, it is really hard to take it back and near impossible with the power of votes.

 

Unless higher taxes/confiscation is done in a synchronized way on a global basis, which I think is impossible, the rich will move to places where their capital is sought after to create enterprises and invest and not to subsidize people who constantly blame them for all their woes. They will even accept a one time tax hit to get out. These countries will enjoy higher currencies, higher standard of living, less unemployment while the other ones will be in terminal decline. This takes a long time to play out or a few decades, but will be the end result.

 

Cardboard     

 

+1. 

 

To quote Warren Buffett "I think it is true, but I'm happy he said it"

[Guest valueInv]

I find it interesting that the free step-up in cost basis isn't being attacked first.

 

Buffett has like $40+b in unrealized capital gains on his Berkshire stock -- it will all be tax-free capital gains when he dies.

 

At the new 20% capital gains tax rate + Obamacare surtax that's practically the entire $9b right there. 

 

So instead, they go after people with $3+m accounts that haven't yet seen them through the rest of their lives.

 

Will $3m be enough if I live to beyond 100 years?

 

Isn't most of Buffet's gains going to charity?

 

That's true in his case today, and I don't want the government to get Bill & Melinda's foundation gift.  However if he changes his mind and chooses to keep it all for his family, that tax would be forgiven.  He hasn't yet given it all even though it sounds like a foregone conclusion.

 

But if you go down the list on the giving pledge, there are a lot of folks on there who will get their capital gains tax free (on the money that isn't being given).  And then of course there's everyone who isn't giving at all.

 

You don't really know what's going to become of my RothIRA in the end -- maybe I too will be leaving it all the charity.  Buffett didn't decide to announce his giveaway plan until twice my age.  He wanted to compound it before giving.  So taking a swipe at my money today... isn't that the same thing as taking a swipe at Buffett when he was younger?  So the charity argument you are right about in Buffett's case, but people die all the time with large amounts of capital gains that are forgiven.

 

1, If you feel that its unfair that Buffet is taxed less than you despite having much higher gains and wealth, Buffet and Obama are in complete agreement with you - they both want to raise his taxes. You should ask the Republicans on why they blocked it.

 

2, The IRA is an Individual Retirement Account - it is an account where the govt. relaxes its taxation to help individuals save for their retirement. As the name suggests it was not created to help people enrich themselves, not created to help people donate to charity and not created to help people pass money to their kids. What you are saying is that you want to use a vehicle created for one purpose for those other ones. That is not the mandate of the IRA. In fact, they should have structured the IRA like a FSA, if you don't use it, you lose it, that way you don't abuse it. 

 

3, Lets flip the question around. You are in Obama's shoes. You have to deal with the large debt load and the deficit. What would you do?

[Guest valueInv]

This is a message from Obama that he is unhappy with anyone making more than 120k a year (that line about the government determining what is reasonable).

This does absolutely nothing towards reducing the deficit. 9 billion over 10 years? We have over 75 trillion in liabilities and it is all from Medicare, Medicaid and ss.

Obama said in the most recent debate that republicans (Romney) is against PBS because it raises virtually nothing rather it was more of a message of values.

This is the same thing. This is Obama and him communicating a message that anything above 120k or 200k if you are single about it being unfair that they have that amount.

I used to think he has been mostly reasonable but this truly is a dick move as another poster communicated.

 

No doubt that this particular "dick move" is an Obama administration proposal. And i agree it is a dick move.

 

However, I'm fairly certain that regardless of what party is in power in the future more Austerity is coming. Be it in the form of higher taxes, reduced benefits/entitlements, reduced govt spending on public services, inflation, and other more direct means of confiscating ones wealth. Depending on which political party is in power at the time, will determine who is the winner and who is the loser. Point is there will still be a winner and still be a loser regardless of who is in charge. With such a large deficit, the money has to come from somewhere.

 

 

+1

 

Without incremental revenues, the deficit is not going anywhere. Everyone will end up being pi$$ed about something, they have to put their hands into every bucket there is.

 

+1

 

I think the underlying argument is really about "Don't tax me, tax somebody else."

[ERICOPOLY]

I think the underlying argument is really about "Don't tax me, tax somebody else."

 

 

Yup.  This is why Warren Buffett wants to tax my capital gains higher but didn't instead propose a tax on his unrealized capital gains (which is partly due to the earnings that he retains and reinvests to avoid tax rate on dividends at the individual level).  Didn't instead propose an increase in tax rates on the 14.5% he pays on his passive dividends through his insurance subs.

 

He wants higher taxes to make things more equitable, but doesn't want to be the one paying them. 

 

Only 1% of his assets are in an account where he would be subject to the taxes he proposes.

 

Hey, I've got an idea -- and I'll sound very generous in proposing this and people will applaud me on TV -- how about you tax 1% of my assets at a higher rate, but leave the 99% of my net worth alone?

 

 

EDIT:  His is really a tax-deferral vehicle, just like my RothIRA. 

 

 

[ERICOPOLY]

I think I am now officially a Republican.  I just need to go and register (formality at this point).

 

Hopefully my vote in the primaries for the most pro gay-marriage and pro secular-education candidate (etc... etc...) will reform that party to something I find far less revolting.  It's not a completely broken party, but just needs major renovation. 

 

 

 

[Packer16]

You are right Buffet is doing the same thing as Romney just in a different way (Cap Gains versus IRA) (form over substance).  If he really wanted folks to pay a higher tax rate he would donate a portion of his wealth to Uncle Sam as if he earnied the investment income as ordinary income as an example instead of playing the games wealthy folks do.

 

Packer

[Cardboard]

"2, The IRA is an Individual Retirement Account - it is an account where the govt. relaxes its taxation to help individuals save for their retirement"

 

Exactly, so that one does not end up being a parasite of society. The question is why putting a cap at $3 million? Is that enough? Is that going to be properly adjusted for inflation? What about people that are single or that have a significant other with a very generous pension plan or one with none at all isn't that discriminatory? If you live longer isn't that cap creating issues in your late years to have enough funds left?

 

"3, Lets flip the question around. You are in Obama's shoes. You have to deal with the large debt load and the deficit. What would you do?"

 

Resign. Let someone in who can inspire and lead the country to greatness instead of taking it to pieces with such proposals. Do some common sense fixes such as eliminating real tax loopholes and raising the retirement age on safety net programs which are not earned by people but, given to them by the goodness of society and strangers. If they want more or better then they know what they have to do.

 

Cardboard

[ERICOPOLY]

You are right Buffet is doing the same thing as Romney just in a different way (Cap Gains versus IRA) (form over substance).  If he really wanted folks to pay a higher tax rate he would donate a portion of his wealth to Uncle Sam as if he earnied the investment income as ordinary income as an example instead of playing the games wealthy folks do.

 

Packer

 

Romney's tax shelter will be fully hit with income taxes when he dies.

 

When Buffett dies, his tax shelter becomes 100% tax free.

 

This makes absolutely no sense that Obama is getting more pissed about Romney's tax shelter than about Buffett's tax shelter.

 

But then Buffett is a political ally that helped get Obama elected.  Maybe Buffett was very calculating about this -- keep your friends close but your enemies closer.

 

[Guest valueInv]

I think the underlying argument is really about "Don't tax me, tax somebody else."

 

 

Yup.  This is why Warren Buffett wants to tax my capital gains higher but didn't instead propose a tax on his unrealized capital gains (which is partly due to the earnings that he retains and reinvests to avoid tax rate on dividends at the individual level).  Didn't instead propose an increase in tax rates on the 14.5% he pays on his passive dividends through his insurance subs.

 

He wants higher taxes to make things more equitable, but doesn't want to be the one paying them. 

 

Only 1% of his assets are in an account where he would be subject to the taxes he proposes.

 

Hey, I've got an idea -- and I'll sound very generous in proposing this and people will applaud me on TV -- how about you tax 1% of my assets at a higher rate, but leave the 99% of my net worth alone?

 

 

EDIT:  His is really a tax-deferral vehicle, just like my RothIRA.

 

Where can I find his tax proposal where he specifies specific method of taxation?

 

Who are the others who will end up paying more taxes at his income level? i.e. who are the others who make $500MM++ in a year that are not capital gains?

 

How would you tax unrealized gains when the gains are fluctuating constantly? 

 

What about the answers to my other questions?