After dinner conversation : "They're coming after your IRA."

[Dan D. Doty]

Saw yesterday on the news that California ( maybe followed by the Federal Government) plans to tax wealth, not income, but wealth.

This means they'll go after the money you saved, your stocks, the value of your house, the value of your business, and the value of your farm.

In other words, they want to punish and humble you because you were successful in making something of yourself.

Get ready kids, the dark storm is really here and the sh*t is going to start flying.

[Novaheart]

Saw yesterday on the news that California ( maybe followed by the Federal Government) plans to tax wealth, not income, but wealth.

This means they'll go after the money you saved, your stocks, the value of your house, the value of your business, and the value of your farm.

In other words, they want to punish and humble you because you were successful in making something of yourself.

Get ready kids, the dark storm is really here and the sh*t is going to start flying.

Some commie floating an idea is not exactly the same as the government planning action. There have been proposed schemes to disinherit the privileged since I was an adolescent. I recall people talking about "making inherited wealth a thing of the past". Oddly, one can see some positives to such a scheme. If the threat of loss of fortune causes rich people (and I don't mean people who have a few bucks, a house, and a pension) to disperse their fortunes to their heirs sooner rather than later, then there is a halfway decent chance of a hurricane effect on the economy.

[Odysseus]

There is nothing whatsoever to support the belief that the government will take over your 401K, a product which was designed to screw you out of a real pension, but you're perfectly OK with stock market crapshooters "borrowing" your stocks, betting against your investments, and then putting them back before you notice they are gone.

The plan to screw us out of a real pension was Social Security, which took decades of forced investments, squandered them on current spending, and then paid out a pittance. A number of analyses have shown that the same money, put into an IRA, would have presented the average retiree with over $1 million in principal, with annuities in the $50-60,000 range, or roughly $5,000 per month, roughly three times what Social Security pays, and, of course, at the end of your life, you'd have that $1 million to leave to your heirs. Social Security is legalized theft.

Half of all people are of less than average intelligence.

Edit: That's not even an accurate measure. Consider back in high school when you took the Iowa Tests. Weren't your parents proud that you scored in some amazing percentile? Are you a genius by your own assessment? If not, then consider how dull most people must be to put you at the top if you're lousy at chess and algebra.

I used to play a wicked game of chess, but I'm out of practice. I scored in the top 2% on my PSAT (National Merit Scholarship semifinalist) and had a GT of 127 on my ASVAB (which put me in intelligence category IA). Jones is capable of dealing with complex duties in a branch of service that can afford to be choosy. All things being equal, I'll put our intelligence up against yours any day. As for how dull the rest of the America may be, 53% of the electorate demonstrated that they cannot count to $5 trillion, couldn't find Benghazi on a map and didn't know that voting wasn't the same as losing your virginity.

[djones520]

Huh? Are we talking about me?

I got a 97 out of 100 on the ASVAB AFQT. Average was a 27 when I took the test.

As for the 401K, I've been contributing money to mine since the day I joined. My entire signing bonus went into it, and I've been paying 7% of my pay in since. Even with that when the DoD said they wanted to switch over from the pension to a 401k system, I was spitting nails. It was figured that I'd have lost something around 40% of my retirement pay by doing that.

[Bailey]

The plan to screw us out of a real pension was Social Security, which took decades of forced investments, squandered them on current spending, and then paid out a pittance. A number of analyses have shown that the same money, put into an IRA, would have presented the average retiree with over $1 million in principal, with annuities in the $50-60,000 range, or roughly $5,000 per month, roughly three times what Social Security pays, and, of course, at the end of your life, you'd have that $1 million to leave to your heirs. Social Security is legalized theft.



I used to play a wicked game of chess, but I'm out of practice. I scored in the top 2% on my PSAT (National Merit Scholarship semifinalist) and had a GT of 127 on my ASVAB (which put me in intelligence category IA). Jones is capable of dealing with complex duties in a branch of service that can afford to be choosy. All things being equal, I'll put our intelligence up against yours any day. As for how dull the rest of the America may be, 53% of the electorate demonstrated that they cannot count to $5 trillion, couldn't find Benghazi on a map and didn't know that voting wasn't the same as losing your virginity.

Is what you say true about SS? I will be lucky to see a pittance if anything. Do you have a link for that Ody? just so i can use it if I get into a argument with a moonbat.

[djones520]

Half of all people are of less than average intelligence.

Edit: That's not even an accurate measure. Consider back in high school when you took the Iowa Tests. Weren't your parents proud that you scored in some amazing percentile? Are you a genius by your own assessment? If not, then consider how dull most people must be to put you at the top if you're lousy at chess and algebra.

Am I a genius? I wouldn't say so. I do know I'm smarter then the average person. Maybe not even that, but my brain does work in a way that lets me see things that the average person cannot. It's why I'm so succesful at being a weather forecaster. I've seen a ton of "smart" people not be able to cut it in this job because they couldn't think the right way. I'm not really sure how to explain it, but I qualified for every job in the most selective branch of the military. The "average" person couldn't even score high enough on the ASVAB to get into the Air Force 11 years ago when I joined, and I've only met a handful of people who scored higher then I did.

I'm really not sure what any of that has to do with me trying to find out if DU posters really exist.

[Bailey]

I took the asvab when I was a young lad, I forgot what I scored on it but I do remember the Navy sending me letters saying I qualify to work on their nuclear reactors. Great now I am wondering what I got on it lol

[Odysseus]

Is what you say true about SS? I will be lucky to see a pittance if anything. Do you have a link for that Ody? just so i can use it if I get into a argument with a moonbat.

Of course it's true. Here are a few sources: http://moneytalkscoaching.com/2011/0...cial-security/

Privatizing Social Security would look something like this.

The benefits of privatizing Social Security are:

• Your money stays your money. You are putting money aside for your use. You don’t pay someone else’s benefits with the hope and promise that someone will come along later to pay your benefits.
• Unused funds can be inherited. Right now you could pay into Social Security your entire working life and die before you ever receive benefits. Or you die after only receiving a small benefit. If Social Security was privatized the money you set aside could be passed on.
• The government can’t reduce or withdraw your benefits. You would own your account. As it stands now you have no right to Social Security benefits. The government can change the rules at any time. If it were privatized you would not be at the mercy of the government to allow you to have your money.

Funding Private Accounts

The average wage in the US in 2009 was about $41,000. A person earning this amount would contribute just under $98 per week to Social Security. (Half as payroll deductions, half as employer match).
Now not all of Social Security payments are paid out as retirement payments. Disabled workers and survivors of deceased workers also receive benefits. Disability and life insurance would cover these needs and can be purchased fairly cheaply for most people. But for simplicity we will leave these benefits in the current system. About 66% of benefit payments pay retirement benefits and 34% pay everything else. We will use that same break down the example.
Using these same percentages Joe Average earning $41,000 would sock away $53 per week into his own personal Social Security retirement account. (The other $27 would fund the current disability and survivor benefits of Social Security. Or, if the whole thing were privatized that $27 per week could be used to purchase life and disability insurance.)
Now the tricky part. How much would that leave Joe Average in retirement? That’s tough to say since he isn’t likely to graduate from school, get a job earning $41,000, and make that amount for his entire life until he retires. He will most likely get a job earning less than that, then get raises and promotions along the way. But since we don’t know the specifics we will do the less than perfect thing and say that he made $41,000 for his whole life. We will say he started working at 22 and will retire at 65. We will also say that Joe Average would like his retirement savings to last him until he is 95.
The 4.2% employee contribution is reduced for 2011 from 6.2%. If we use the “normal” 6.2% contribution and move the beginning working age to 25, we get almost the same results below. Just sayin’.
We will run two scenerios. One with “reasonable” numbers and then one very conservative numbers.
The “Reasonable” Scenerio

$53 per week invested at 8% interest for 43 years yields him $1,029,237. Once he is in retirement he decides to take less risk and moves his entire balance to safer investments. He earns 4% while retired.
Joe Average would be able to withdraw $4,913 a month for his entire 30 year retirement. That is $3,574 per month more than the estimated $1,339 Social Security payment he would receive. (To estimate benefits I used the birthday of May 1, 1980. Earnings of $41,000. Retirement in May 2045. And Today’s Dollars)
The “Conservative” Scenerio

The opponents of privatizing Social Security argue that the average person can’t get good returns from the stock market. They liken it to gambling. I disagree with this. Over the last 40 years the stock market has seen a gain of 11.2%. Will the stock market go up 11.2% over the next 40 years? Only time will tell. So let’s play into the opponents view that it’s not possible for Joe Average to get even reasonable gains of 8%.
So let’s say that Joe Conservative invested $53 per week and earned 6% for 43 years. He would have $557,178. At age 65 he takes all his money and puts it into a savings account earning 2% at a local bank.
With $557,178 earning 2% per year Joe Average could withdraw $2,059 a month and his money would last him 30 years. This is $720 more than the estimated $1,339 he would receive from Social Security.
What about taxes, you ask? In the conservative example, if Joe Average were paying his regular income tax rate (using 2011 tax brackets) he would owe a total of $3,281 a year if he had no deductions, or $273 per month. This is still above what he would be receiving from Social Security. In the reasonable example, Joe Average would owe$10,864 or $905 per month. Again, he would still be better off than under the current Social Security system. However since Social Security payments receive tax breaks I would like to think they still would under a privatized system. But who knows?

Then there is the example of Chile, which privatized their version of Social Security in 1981. You can read the results at http://www.cato.org/pubs/policy_report/pr-ja-jp.html, but here is the gist:

The main goal and consequence of the pension reform is to improve the lot of workers during their old age. As I will explain, the reform has a lot of side effects: savings, growth, capital markets. But we should never forget that the reform was enacted to assure workers decent pensions so that they can enjoy their old age in tranquility. That goal has been met already. After 14 years and because of compound interest, the system is paying old-age pensions that are 40 to 50 percent higher than those paid under the old system. (In the case of disability and survivor pensions, another privatized insurance, pensions are 70 to 100 percent higher than under the old system.) We are extremely happy.


But there have been other enormous effects. A second--and, to me, extremely important--one is that the new system reduces what can be called the payroll tax on labor. The social security contribution was seen by workers and employers as basically a tax on the use of labor; and a tax on the use of labor reduces employment. But a contribution to an individual's pension account is not seen as a tax on the use of labor. Unemployment in Chile is less than 5 percent. And that is without disguised unemployment in the federal government. We are approaching what could be called full employment in Chile. That's very different from a country like Spain, with a socialist government for the last 12 years, that has an unemployment rate of 24 percent and a youth unemployment rate of 40 percent.


Chile's private pension system has been the main factor in increasing the savings rate to the level of an Asian tiger. Our rate is 26 percent of GNP, compared to about 15 percent in Latin America. The Asian tigers are at 30 percent. The dramatic increase in the savings rate is the main reason that Chile is not suffering from the so-called tequila effect that plagues Mexico. We do not depend on short-run capital flows because we have an enormous pool of internal savings to finance our investment strategies. Chile will grow by about 6 percent of GNP this year, the year of the "tequila effect." The stock exchange has gone down by only 1 or 2 percent and will be higher at the end of the year. Chile has been isolated from short-run capital movement because its development is basically rooted in a high savings rate.


Pension reform has contributed strongly to an increase in the rate of economic growth. Before the 1970s Chile had a real growth rate of 3.5 percent. For the last 10 years we have been growing at the rate of 7 percent, double our historic rate. That is the most powerful means of eliminating poverty because growth increases employment and wages. Several experts have attributed the doubling of the growth rate to the private pension system.


Finally, the private pension system has had a very important political and cultural consequence. Ninety percent of Chile's workers chose to move into the new system. They moved faster than Germans going from East to West after the fall of the Berlin Wall. Those workers freely decided to abandon the state system, even though some of the trade-union leaders and the old political class advised against it. But workers are able to make wise decisions on matters close to their lives, such as pensions, education, and health. That's why I believe so much in their freedom to choose.

With a bit of searching, you can find more. There was a lot of talk about this prior to the financial crisis, but the Democrats successfully demagogued the issue and frightened people away from individual accounts and the stock market, even as their policies have driven markets south.