I wrote a rather long explanation about this on my blog. I cannot link to it because of TOS and all, but you have some excellent points.
There was even an outline on how they would do this written by a woman who presented it in a conference to Nancy Pelosi and the democrats several
*years* ago, now.
Here is a summary:
Hold on to your 401(k) and IRA! The Government is coming!
Sunday, February 8, 2009
Since 2007, in fact. A briefing paper was submitted on how this could be done, and how to pull it off as "necessary" to save the economy.
The paper was submitted to the hearings, in which the writer participated.
"On November 20, 2007, Dr. Ghilarducci participated in the Economic Policy Institute's latest "Agenda for Shared Prosperity" event in Washington,
DC. At the event, she unveiled a briefing paper, Guaranteed Retirement Accounts, which outlines her vision for combining the best features of
traditional defined-benefit pensions and 401(k)-style defined-contribution plans."
When the government was fretting over losing "billions, even trillions!", a lot of what they were speaking about was *our* money, that we watched
disappearing from our 401 and IRA statements.
As of October, November, and December of 2008, they were talking about how seizing the accounts would net them nearly four trillion easily. Could this
be the provocation behind the stimulus?
The claim is, it costs the government $80 billion a year in unpaid taxes on these accounts. How is it costing the government $80 billion in unpaid
taxes, then on the other hand people are saying, "That money in your 401 wasn't really there, it was assumed income based on your earnings at
retirement, and only your real dollars were there."
Huh? Is it digital dollars, or is it really a loss? The real answer comes after retirement as the funds are withdrawn, where they still get taxed.
Sure, at a lesser rate, but that's the benefits *earned* by saving in these accounts.
I call it a percieved loss for the government, as it isn't tangible. They want your accounts, because when they seize them, it becomes tangible
nearly $4 trillion payout.
I say, chase down all the Democrats who forgot to pay their taxes and make them! That ought to even it out some...considering they feel they are above
silly things like, oh, I don't know... taxes?
This statement, alone, under her proposed plan - should chill your blood.
"Death benefits. Participants who die before retiring can bequeath half their account balances to heirs; those who die after retiring can bequeath
half their final account balance minus benefits received."
You can download the pdf here:
(Got to love that website name, huh?)
After your 401 or IRA is seized, they would open an account for every American, and start it with $500.00. Spread the wealth, remember?
Every American, even those not working, because, that's only fair, right? The government will then automagically deduct %5 of your pay after tax to
go to the account, and meet your deposit with only %3 annually. This is mandatory, too, by the way. Not voluntary like retirement accounts are now.
Why mandatory? Because they say, "People are not intelligent enough to save on their own, we must do it for them."
When you die, your family inherits only half the balance, the other half goes into the government coffers.
Half. Half of *your* money. So anything they give as "interest", is taken back, not to mention part of your *real* income, which was already taxed
to hell, because it will be taxed under their plan, not pre-tax, like it is now.
For instance, if you have a balance of $200,000 in your 401, if you die before you retire, your family gets half. So, $100,000. So you lose $97,000 if
you consider their co-pay of %3 as going back to them.
If you die after you retire, they get less than half, which is still stealing your money because you paid %5, matched to their %3. This is misleading
because it is less than half. It is half plus %3. Isn't that kind of a death tax or something?
So they get half the balance, minus the %3 they put in, *and* a portion of what you paid in. It's a win win for them! That is, after they seize them,
they pay you a measly %3 government interest as opposed to up to 6% now.
So lets see. $200,000 minus %3 off the top at $6,000, then halved.
Leaves your family $97,000.
So that would be $103,000 back to the government.
It's only somewhat beneficial if you die before you retire, where they would get back $100,000 skipping the %3. Your family gets an extra $3,000.
Wealth redistribution at it's finest! Not so far fetched after the first weeks of the presidency, is it now?
House Democrats contemplate abolishing 401(k) tax breaks
Mandatory contributions from workers considered
By Sara Hansard
October 12, 2008 6:01 am ET
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.