Tax Man Obama Wants to Tax Your Tax-Free Savings Accounts
In the biblical book of Job, we find Job saying, “The Lord gave and the Lord has taken away. Blessed be the name of the Lord” (Job 1:21).
In the United States, the State is god. What the State gives, it can take away.
Glenn Harlan Reynolds, writing in USA Today, lays out how Obama is going to rifle Middle Class savings plan to fund his “free education” proposal even though in 2006 Obama voted as a Senator to make the 529 savings plans permanent. The plans were designed to help parents save for college, but that would mean the State would not be the direct benefactor:
“Bank robber Willie Sutton is said to have explained his career this way: “That’s where the money is.” Whether Sutton ever really said that, it’s an aphorism that, according to Bloomberg‘s Megan McArdle, explains President Obama’s plans to go after middle class assets like 529 college savings plans and home appreciation.
“Though millions of Americans have been putting money into ‘tax free’ 529 plans to save for their children’s increasingly expensive college educations, President Obama would change the law so that withdrawals from the plans to fund college would be taxed as ordinary income. So while you used to be able to get a nice tax benefit by saving for college, now you’ll be shelling out to Uncle Sam every time you withdraw to pay for Junior’s dorm fees.”
If the State can start taxing these once tax-free accounts, there is no stopping the State from taking money from the accounts of anybody “who can afford it.” You know, the rich.
Sometime in the future the government might come up with a lifestyle cost index. If the amount of money in your savings is beyond the minimum determined by the State for you to live on, then that money could be confiscated in order to establish income equality by redistributing your “excess” to people who have not prepared for the future.
In the eyes of the government, all the money that you and I earn really belongs to the State. The government exempts money from taxation. At a later time, as Obama is trying to do now, the government could determine that more of our income should no longer be exempt from taxation.
The author of the USA Today writes something very revealing. There aren’t enough rich people to tax to fund all the programs liberals of both parties want to fund. While tax and spend programs are supported by the poor and middle class, the middle class forgets that the real money is in their savings accounts.
“When a government is desperate for cash, it goes after the middle class, because that’s where the money is. Yes, the rich are rich, but the middle class is far more numerous. And this has raised other fears. As McArdle also notes, if 529 plans aren’t sacrosanct, what about Roth IRAs? People have worried for a while that the government might go after retirement accounts as another source of income — to the point that there have even been calls for Congress to make such grabs explicitly off limits. But, ultimately, no one is safe, as what is enacted by one Congress can be repealed by another.
“The truth is, in our redistributionist system politicians make their careers mostly by taking money from one group of citizens that won’t vote for them and giving it to another that will. If they run short of money from traditional sources, they’ll look for new revenue wherever they can find it. And if that’s the homes and savings of the middle class, then that’s what they’ll target.”
The middle class has become the “new rich.” The Tax Man’s coming, and you better not ask what Obama wants it for “if you don’t want to pay some more”: