Posted on 07/15/2008 4:18:29 PM PDT by Man50D
This is the first in a series of three articles on how your pockets are being shamelessly picked by government and big business.
I bet you knew the IRS was robbing you. You just didn't know how much. Read on.
Are you a middle-class retiree living here on our little sandbar with money in an IRA? The IRA is supposed to give you a break by allowing you to put money away tax-free, allow it to grow, and then tax you when you withdraw it. Sounds good, doesn't it? You're getting robbed. You're not the one benefitting by it as much as the government with its pork barrel projects.
Last year I took my first mandatory withdrawal from my IRA. In round numbers, it was about $10,000. The covenant I made with the government was that I would then pay taxes on this $10,000. Fine. But I ended up paying taxes on $20,000!
Why? The previous year, $3,000 of my social security was taxable. But last year, the IRA withdrawal, added as regular income, increased my adjusted gross income (AGI) so that $13,000 of my social security was taxed. In other words, I withdrew $10,000, but our tax code, trying to squeeze everything out of the middle class, taxed an additonal $10,000 of my social security, for a total of $20,000. Except for the IRA withdrawal, there was nothing different from the year before. I was, in effect, DOUBLE-taxed for my IRA withdrawal.
Don't think there is not a group of Congressmen (who make the laws) and a group of government tax people (who formulate and execute them) sitting around saying, "Hey, why wait to collect all the taxes on their IRAs? Let's nail them and take all their money now!" That's what they're doing, and we're sitting still for it. Actually, we're doing more than sitting still: we're re-electing the hooligans, allowing them to support their pork barrel projects, and supporting people who don't pay any taxes and for whom multi-generational welfare has become a way of life.
And that's not the end of it. Your IRA capital gains are being taxed as regular income, not at the lower capital gains tax rate. Also, your IRA dividends are also being taxed as regular income, not at the lower dividend tax rate. You are getting doubly and triply screwed.
Cui bono? Who benefits? The government--these same avaricous politicians who made the laws.
In a previous life, as a columnist for the Cape Cod Times, I railed against the Bush dividend tax cut. I pointed out that the rich, who owned oodles of dividend-paying Dow Jones stocks, would benefit enormously from it, while the great befuddled middle class, who had most of their investments in IRAs, would be gouged by having their accrued dividends taxed at the regular income rate. No one listened.
Even Warren Buffet, the richest man in the world, pointed out that under that change his secretary would be paying as much tax as he. People, especially, the middle class, hear "Tax cut!" and they stand up and cheer without realizing they're the fools who will be making up the revenue difference. It's really easy for the government to con them. They want to be conned.
A Roth IRA can help overcome some of these inequities. With a Roth, you pay taxes for your contributions on the front end so that you don't get hurt as much on your returns on the back end. That's the smart thing to do if you're in a position to contribute to an IRA. There are also some conditions that must be met. However, if you're already near or in retirement and want to convert to a Roth, you have to pay a small fortune in taxes up front out of your regular IRA that you may never recoup.
I wish I were not a member of the middle class. Because if I weren't,
1. I would be rich.
2. I would not be a part of a befuddled group that year after year, election after election, allows itself to be taxed into extinction.
I urge you all to read The Fair Tax Book by Neal Boortz. Basically, the fair tax abolishes the IRS and taxes you not on what you earn, but on what you spend. It is a comprehensive and equitable plan, embraced by many, to revamp our disastrous tax system. The web site for Americans for Fair Taxation is www.fairtax.org.
Only one presidential candidate out of the 20 or so originally in our three-ring circus mentioned and endorsed it. That was Mike Huckabee. The others, of either party, seem to be content to continue bleeding America's middle class. That's YOU!
“IRS was robbing you.”
IRS is only a tool of the parasites and their marxist masters of the demorat party.
Keep cash between the mattress and box spring.
Get an account offshore.
Then who was robbing us when the other party held the majority?
Correct. I should have said the “socialist/marxist” parties
Note to self: Pull out all 401K Contribution before you go on Social Security. That gives me from 59.5 to 67 (assuming I will ever get a dime from SS to begin with).
That is probably worth consideration.
Starting in 2010, you can roll the contents of a regular IRA to a Roth IRA without regard to income levels, a nifty benefit of the 2006 Retirement bill that was signed into law. At that time, I will roll my after-tax Traditional IRA to a Roth IRA (paying taxes only on the intrest accrued). Next, I'll roll my 401k to a Traditional IRA and the next day roll it to a Roth IRA, gladly paying the taxes. Perverse as it may sound, I'm hoping the bear market continues into 2010, so that the value of my 401k assets will be unusually depreseed, lowering my tax bill upon conversion
My plan is to amass 75-80% of my retirement savings into a Roth IRA and gold boullion, effectively taking me "off the grid" as far as retirement income is concerned. All perfectly legal and w/o the hassle of going offshore.
Thanks for that info. Sounds like a good plan.
Wait! There's HOPE!!!!!
The Messiah has promised to only tax the rich which means that if we anoint the new Messiah as our president in November, us middle class Obama disciples will become duty free!
Hallelujah!! Praise The Messiah! Allah Akbar!!!!!!
(/sarc)(/sarc)(/sarc)(/sarc)
to abolish the income tax..................
Convert everything to cash, realestate, and tangible goods that do not have any tracking numbers attached.
I always thought in my head that a tax revolt would be a good thing, but considering that 80% of American workers are “employees”, they cant refuse to pay taxes because their money is already stolen by the corporation before they get it. The corporations are not going to buck the government for the workers. They probably buck the government for themselves, but the corporate worker is just another milk cow in the herd~~~produce cream or go to the slaughter house.
Gold? What gold? I don’t have any gold......
And that Roth IRA is only as good as the governments promise not to tax it. I wouldn’t hold my breath.
You might have a point there. I thought there would be too much hue and cry if they tried such a thing, but then I read that only about 12% of eligible people have a Roth. Not a very big crowd....
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