The Conservative Cave
Current Events => Politics => Topic started by: Wretched Excess on October 17, 2008, 08:09:49 AM
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THIS is our future if the white house and congress are both in the hands of the democrat party.
House Democrats contemplate abolishing 401(k) tax breaks
Powerful House Democrats are eyeing proposals to overhaul the nation's $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.
House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.
A plan by Teresa Ghilarducci, professor of economic-policy analysis at The New School for Social Research in New York, contains elements that are being considered. She testified last week before Mr. Miller's Education and Labor Committee on her proposal.
At that hearing, the director of the Congressional Budget Office, Peter Orszag, testified that some $2 trillion in retirement savings has been lost over the past 15 months.
Under Ms. Ghilarducci's plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5% of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3% a year, adjusted for inflation.
The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.
"I want to stop the federal subsidy of 401(k)s," Ms. Ghilarducci said in an interview. "401(k)s can continue to exist, but they won't have the benefit of the subsidy of the tax break."
More (http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081012/REG/310139971)
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I was wondering where Obama was planning on getting the money for his programs from... So he won't be directly taxing us, just indirectly. :whatever:
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Was there ever any doubt that the people with targets on their back were the middle class and poor?
Haven't the libs been screaming about how some are willing to sell their freedom for the hope of a little security? Social Security already does that, and this just piles on.
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I was wondering where Obama was planning on getting the money for his programs from... So he won't be directly taxing us, just indirectly. :whatever:
It has to come from someplace - So, instead of making lots of 'new' taxes that will get bad press, he will let current tax breaks/cuts 'expire' and 'close loopholes' - sounds so much better.
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Is there any more of a blatant tax on the middle and working class than taxing the 401(k)?
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Is there any more of a blatant tax on the middle and working class than taxing the 401(k)?
Blatant powergrab to force you into gov't dependency as well.
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What I'm curious about is if this'll affect the break I get with my TSP (federal employees equivalent to a 401k).
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Was there ever any doubt that the people with targets on their back were the middle class and poor?
Haven't the libs been screaming about how some are willing to sell their freedom for the hope of a little security? Social Security already does that, and this just piles on.
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not in my mind. anyone that thought that his tax plan wold even come close to funding his domestic agenda (much less his foreign policy handouts) was delusional.
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There ALREADY is a "retirement system" which we're obliged to contribute. It's called Social Security.
How's that working out? :whatever:
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There ALREADY is a "retirement system" which we're obliged to contribute. It's called Social Security.
How's that working out? :whatever:
they broke that one. so they are going to build something else that will only serve as a mechanism to achieve their arbitrary and capricious definition of "social justice", which they will in turn bankrupt in a decade or so.
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What I'm curious about is if this'll affect the break I get with my TSP (federal employees equivalent to a 401k).
that was my first thought too... leaving it all in t-bills looks better all the time
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And if they take away the tax breaks for 401(k)'s, you can bet your ass that your company will take away a significant portion of the match you currently receive.
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And if they take away the tax breaks for 401(k)'s, you can bet your ass that your company will take away a significant portion of the match you currently receive.
if the gov't takes away the tax breaks for 401k's, the resulting crash will make the current market situation seem mild in comparison.
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George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.
Don't we already have this, and didn't the Democrats boo President Bush when he said he wanted to fix it? :bird:
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Don't we already have this, and didn't the Democrats boo President Bush when he said he wanted to fix it? :bird:
a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.
I Thought that was kind of Bush's plan with the exception that people could invest it on their own. Obviously the Dems are just taking more power for themselves.
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Okay, my blood runs cold when I read the words: all workers obliged to contribute.
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Under Ms. Ghilarducci's plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5% of their pay
I guess this means that employers won`t be contributing anything now so that will free up more money for the dems to tax away.
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That would kill 401(k) and ROTHs would be their replacement.
Paladin0
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Well I guess we;ll never get to retire because they'll get the money and we get screwed again. How in GOD's name this country could ever comtemplate voting those thieves into office I'll never know.
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What I'm curious about is if this'll affect the break I get with my TSP (federal employees equivalent to a 401k).
I suspect it might; it's my understanding that the TSP program is governed largely by the same rules and regulations that govern the 401k program.
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And if they take away the tax breaks for 401(k)'s, you can bet your ass that your company will take away a significant portion of the match you currently receive.
Why do you say that? I will admit my ignorance here, do companies also get a tax break on their matching contribution to a 401K?
To be honest, the only reason I contribute to my 401K is the company match, if wasn't for that I would simply invest my money in taxable money market accounts, mutual funds, stocks and bonds.
I personally don't care about the tax deferment, which is why the bulk of my investments are not in tax deferred accounts. It's my money. I put it aside. I dont agree with paying a penalty for cashing in part of my own money.
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Why do you say that? I will admit my ignorance here, do companies also get a tax break on their matching contribution to a 401K?
To be honest, the only reason I contribute to my 401K is the company match, if wasn't for that I would simply invest my money in taxable money market accounts, mutual funds, stocks and bonds.
I personally don't care about the tax deferment, which is why the bulk of my investments are not in tax deferred accounts. It's my money. I put it aside. I dont agree with paying a penalty for cashing in part of my own money.
Not paying taxes up front on a 401 rather than at the end of your employment allows your money to grow faster. Secondly, your retirement income will be in all likelyhood less putting you in a lower tax bracket when you get ready to start drawing it out.
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What?!!!!
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That would kill 401(k) and ROTHs would be their replacement.
Paladin0
Upside is the money not at the disposal of the govt. Downside ROTH Ira's are after tax contributions. Roth Ira contributions are also Limited to $5000/yr for a married couple. Indexed for inflation beginning in 2009.
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Why do you say that? I will admit my ignorance here, do companies also get a tax break on their matching contribution to a 401K?
To be honest, the only reason I contribute to my 401K is the company match, if wasn't for that I would simply invest my money in taxable money market accounts, mutual funds, stocks and bonds.
I personally don't care about the tax deferment, which is why the bulk of my investments are not in tax deferred accounts. It's my money. I put it aside. I dont agree with paying a penalty for cashing in part of my own money.
Tax deffered investments effectively give an Individual an instant percentage savings equivalent to their current tax rate. That additional money also helps in compounding the value of an Investment.
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Why do you say that? I will admit my ignorance here, do companies also get a tax break on their matching contribution to a 401K?
To be honest, the only reason I contribute to my 401K is the company match, if wasn't for that I would simply invest my money in taxable money market accounts, mutual funds, stocks and bonds.
I personally don't care about the tax deferment, which is why the bulk of my investments are not in tax deferred accounts. It's my money. I put it aside. I dont agree with paying a penalty for cashing in part of my own money.
I have no idea if there is a tax break for the company on its match of a 401K but there are at least a couple of reasons that come to mind why they would stop.
First,they will be bearing the administrative expense to deduct and forward the mandatory 5% that is being talked about (wonder if that is pre tax or post tax btw) so to continue with a 401K contribution will just add more expense.
Second is more of a psychological one in that the thinking will be that it isn`t needed as employees are all set with the government program.
This is nothing but another ponzi scheme to provide a new source of revenue as the last ponzi (SS) is drying out.
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Upside is the money not at the disposal of the govt. Downside ROTH Ira's are after tax contributions. Roth Ira contributions are also Limited to $5000/yr for a married couple. Indexed for inflation beginning in 2009.
If the government get rid of the tax breaks for the 401(k) then there is no incentive to contribute other than a company match (will most likely become taxable income) and that will make a ROTH much more appealing.
Paladin0
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Your Social Security
Just in case some of you young whippersnappers (and some older ones) didn't know this. It's easy to check out, if you don't believe it. Be sure and show it to your kids. They need a little history lesson on what's what.
Our Social Security
Franklin Roosevelt, a Democrat, introduced the Social Security (FICA) Program. He promised:
1.) That participation in the Program would be Completely voluntary,
2.) That the participants would only have to pay 1% of the first $1,400 of their annual incomes into the Program,
3.) That the money the participants elected to put Into the Program would be deductible from Their income for tax purposes each year,
4.) That the money the participants put into the independent 'Trust Fund' rather than into the General Operating Fund, and therefore, would only be used to fund the Social Security
Retirement Program, and no other government program, and,
5.) That the annuity payments to the retirees would never be taxed as income. Since many of us have paid into FICA for years and are now receiving a Social Security check every month --and then finding that we are getting taxed on 85% of the money we paid to the Federal Government to 'put away' -- you may be interested in the following:
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Q : Which Political Party took Social Security from the independent 'Trust Fund' and put it into the General Fund so that Congress could spend it?
A: It was Lyndon Johnson and the democratically Controlled House and Senate.
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Q: Which Political Party eliminated the income tax deduction for Social Security (FICA) withholding?
A: The Democratic Party.
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Q: Which Political Party started taxing Social Security annuities?
A: The Democratic Party, with Al Gore casting the 'tie-breaking' deciding vote as President of the Senate, while he was Vice President of the US
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Q: Which Political Party decided to start giving annuity payments to immigrants?
A: That's right! Jimmy Carter and the Democratic Party. Immigrants moved into this country, and at age 65, began to receive Social Security payments! The Democratic Party gave these payments to them, even though they never paid a dime into it!
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Then, after violating the original contract (FICA), the Democrats turn around and tell you that the Republicans want to take your Social Security away!
And the worst part about it is, uninformed citizens believe it!
If enough people receive this, maybe a seed of awareness will be planted and maybe changes will evolve. Maybe not, some Democrats are awfully sure of what isn't so.
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I appreciate the responses folks, I fully understand the benefits of contributing to a 401K when it comes to the tax break our actually the tax deferment benefit that one gets by such a contribution.
I was merely stating that I prefer to not invest all of my discretionary funds in my 401K. I prefer to have investment assets that I can tap as needed without having to worry about paying any sort of penalties.
Such investments can come in real handy if one loses their job due to downsizing or whatever and needs funds available to live on without paying a tax penalty.
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I appreciate the responses folks, I fully understand the benefits of contributing to a 401K when it comes to the tax break our actually the tax deferment benefit that one gets by such a contribution.
I was merely stating that I prefer to not invest all of my discretionary funds in my 401K. I prefer to have investment assets that I can tap as needed without having to worry about paying any sort of penalties.
Such investments can come in real handy if one loses their job due to downsizing or whatever and needs funds available to live on without paying a tax penalty.
You might want to talk to a tax accountant; there are some exceptions which exclude penalties for early withdrawls in an emergency situation. If I were you and the company is matching your contributions, I would put in the max. amount and not worry about the penalty.
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I can see Congress has figured out that no matter what they do, mathematically their popularity can't drop more than ten percentage points from where it is now.
:sarcasm:
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You might want to talk to a tax accountant; there are some exceptions which exclude penalties for early withdrawls in an emergency situation. If I were you and the company is matching your contributions, I would put in the max. amount and not worry about the penalty.
I contribute up to the company match, which is 6%. I could contribute more than that to my 401K, I simply choose not to.
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Wow...how this guy is ahead in polls is mind boggling. He would bring this country to it's knees. I can see a revolution in the future if any of his ideas come to fruition.
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a little more on the subject. would the dems declare war on 401K plans if they were in control of all three branches
of government? only if they believed in income redistribution :whatever:
Would Obama, Dems Kill 401(k) Plans?
I hate to use the "S" word, but the American government would never do something as, well, socialist as seize private pension funds, right? This is exactly what cash-strapped Argentina just did in the name of protecting workers' retirement accounts (Efharisto, Fausta's Blog). Now, even Uncle Sam isn't that stupid, but some Democrats might try something almost as loopy: kill 401(k) plans.
House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created "guaranteed retirement accounts" for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, said that since "the savings rate isn't going up for the investment of $80 billion [in 401(k) tax breaks], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that's not generating what we now say it should."
A few respectful observations:
1) McDermott is right when he says the savings rate isn't going up. But the savings rate doesn't include gains to money you invest in the stock market. It ignores the buildup of net worth. (If you bought a share of XYZ Corp. in January at $100, for instance, and its value doubled by December, the savings rate measure would still value that investment at $100. In short, the savings rate is a phony number.)
2) So based partly on the above faulty logic, the $4.5 trillion, as of the start of the year, invested in 401(k) plans doesn't count as savings.
3) Ghilarducci would have workers abandon the stock market right at the bottom of the market. A stupid idea, according to Warren Buffett: "I don't like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I'll follow the lead of a restaurant that opened in an empty bank building and then advertised: 'Put your mouth where your money was.' Today my money and my mouth both say equities."
More (http://www.usnews.com/blogs/capital-commerce/2008/10/23/would-obama-dems-kill-401k-plans.html)
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The facts are that the Federal or State Government could not run a whorehouse as well as a private enterprise.
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The facts are that the Federal or State Government could run a whorehouse as well as a private enterprise.
No they couldn't.
They'd F that up too.
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$80,000,000,000 in tax breaks?
Tax breaks or taxs deferments? I am unaware of any actual tax break, to me a tax break is where I don't have to pay the tax period, or pay a lesser percentage. With most 401 K type plans as well as traditional IRAs, the taxes are merely deferred. I will still have to pay the taxes upon withdrawing the funds after I retire.
I know the above is a rather simplistic view of what can be a fairly complicated issue, but I hope I have some what explained my opinion.
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I hear you. your lectures have not fallen upon deaf ears.
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One of the things that irritate me about this situation, is that the alleged "tax breaks" were created by Congress to encourage average people to put money aside for their retirement, instead of relying solely on Social Security.
Now they're saying it's not working because enough people aren't saving as much as the government thinks they should be?
It's rather ironic how the government rarely takes ownership of their own mistakes and owns up to the mess that they make of things. It's always somebody else's fault... I guess none of these jerk offs own a mirror.