Posted on 12/26/2009 12:23:40 PM PST by FromLori
“It’s capitalism, I guess, but it’s not to be applauded.”
BS!!! It’s goobermint out of control!!!
My proposal: offer a new savings account at the treasury which pays the 20 year treasury rate but with annual liquidity. This would be available only to IRA’s, 401(k)’s, or personal accounts for people on social security. In addition, those retired could take money out of their retirement accounts with a special one-time 10% tax.
I’m not a tax-advisor, so its best to check with someone who is. Here’s my reason for believing the interest isn’t tax deductible - You’re paying interest to yourself. Just as paying yourself to mow your own lawn isn’t income, paying interest to yourself to borrow your own money isn’t really an expense. You make a good point about opportunity cost. If your money was earning a very low return, and would have continued to earn a low return, your opportunity cost is lower. I once borrowed $5,000 from my 401(k) account for one year. During that year, the rest of my account (invested in equities) earned 12%. My opportunity cost was $600 in missed earnings that year PLUS the compounded earnings on those $600 over the next 25-30 years. It ended up being a mighty expensive loan for me.
With all the Cadillac benefits our elected officials get, I wonder if they would miss any of it - - if somebody figured out how to take it from them.
“It’s capitalism, I guess, but it’s not to be applauded.”
That right there is the cause of this whole mess; misunderstanding of capitalism.
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