The Fiscal Cliff

[snowcat]

I don't see that it is available publicly. This from the Wyoming Business Report:

http://www.eenews.net/public/energywire/2013/03/27/1

While that's a matter of some dispute, Interior officials told EnergyWire that the agency is authorized to withhold the payments as part of the mandatory sequester cuts.

That position is supported in the Office of Management and Budget report this month to Congress that noted federal "mineral leasing and associated payments" are not shielded from budget sequestration cuts.

[Pelado]

http://www.eenews.net/public/energywire/2013/03/27/1

From your link comes a link to the actual letter:

http://www.eenews.net/assets/2013/03...ment_ew_01.pdf

[Pelado]

The next question I would have is what is the basis or the authority for the states getting 50% of natural resource revenues? Can the sequestration order overrule that authority?

[Joe Public]

I think a lot of states will have reduced payments; Wyoming's is probably one of the biggest cuts. My question, for which I can't find an answer, is whether the feds are treating this as an IOU (postponing cash outflows due to the sequester, but intending to pay them at a later time) or disavowing any responsibility to pay the balance in the future. I think the takings discussion is relevant only in the latter case.

[Pelado]

I think a lot of states will have reduced payments; Wyoming's is probably one of the biggest cuts. My question, for which I can't find an answer, is whether the feds are treating this as an IOU (postponing cash outflows due to the sequester, but intending to pay them at a later time) or disavowing any responsibility to pay the balance in the future. I think the takings discussion is relevant only in the latter case.

The letter gives no indication that it's a timing issue - just that the payments will be cut at least through July and possibly through September.

[Pelado]

Really interesting piece from Major Garrett about Paul Simon, a journalist turned academic turned Democrat politician:

Before that vote, Simon said increasing federal deficits and debt loads threatened future spending not just on entitlements, but everything else. “If we do not act, interest payouts will spiral upward until they consume not only Social Security, but also health care, education, and transportation,” he said. In his own whimsical reformation of President Kennedy’s tax-cutting-leads-to-economic-growth mantra of the early 1960s, Simon warned in the mid-1990s that “a rising tide of red ink sinks all boats.”

Clinton’s victory in defeating the balanced-budget amendment stands as a watershed political moment of his presidency. It allowed him to chart balanced-budget politics on his terms and keep his party unified as he did so — which allowed him to seek renomination unchallenged and win a second term.

It’s no coincidence Simon retired the next year.

Ironically, Simon predicted the dilemma Obama, another Illinois Democrat, has faced. He also warned if actions were not taken in the 1980s and 1990s, even liberal Democrats in future years would have to cut government in ways they opposed.

The White House blames sequestration entirely on Republicans. Fine. But Obama was there at sequestration’s inception, and he signed the law that set across-the-board spending cuts — which the White House demanded hold entitlement spending harmless — in motion.

http://www.nationaljournal.com/colum...obama-20130326

[Surfah]

I think a lot of states will have reduced payments; Wyoming's is probably one of the biggest cuts. My question, for which I can't find an answer, is whether the feds are treating this as an IOU (postponing cash outflows due to the sequester, but intending to pay them at a later time) or disavowing any responsibility to pay the balance in the future. I think the takings discussion is relevant only in the latter case.

If it is consistent with the rest of sequestration cuts, that money will not be reimbursed.

[Joe Public]

I'm very interested to see the details of the proposed $3MM cap on IRAs in President Obama's budget. I think there's been some discussion on this board about the government coming after tax-deferred retirement accounts eventually. To my recollection, this is the first time a legislator or president has actually proposed something that moves in that direction.

[ERCougar]

I'm very interested to see the details of the proposed $3MM cap on IRAs in President Obama's budget. I think there's been some discussion on this board about the government coming after tax-deferred retirement accounts eventually. To my recollection, this is the first time a legislator or president has actually proposed something that moves in that direction.

wait...what?

[CardiacCoug]

wait...what?

Yeah I saw this a couple of days ago -- part of sticking it to Romney (and other people stupid enough to plan responsibly for their own retirement).

http://www.bloomberg.com/news/2013-0...llion-cap.html

[PaloAltoCougar]

It would terrible tax policy to tax IRAs over $3 Million, but I'd like to hear the argument against eliminating the tax deduction for contributions to IRAs or other retirement plans once the aggregate amount of all such deferred accounts exceeds, say, $3 million adjusted in the future for inflation. We want to encourage people to save for retirement so they can be self-sustaining in their dotage, but why give a tax break on massive contributions by those who have already saved more than enough to sustain them if they live to be 180? Some defined benefit and other plans allow high income individuals to put away many tens of thousands of dollars on a tax-deferred basis, even if they're already sitting on tens of millions in their tax-deferred accounts.

[myboynoah]

It would terrible tax policy to tax IRAs over $3 Million, but I'd like to hear the argument against eliminating the tax deduction for contributions to IRAs or other retirement plans once the aggregate amount of all such deferred accounts exceeds, say, $3 million adjusted in the future for inflation. We want to encourage people to save for retirement so they can be self-sustaining in their dotage, but why give a tax break on massive contributions by those who have already saved more than enough to sustain them if they live to be 180? Some defined benefit and other plans allow high income individuals to put away many tens of thousands of dollars on a tax-deferred basis, even if they're already sitting on tens of millions in their tax-deferred accounts.

Seems reasonable, PAC, but it's the slippery slope to communism. I believe that this exact issue got Karl Marx started on his journey. I should know, we visited his birthplace in Trier, Germany as a family. Be careful.

[PaloAltoCougar]

Seems reasonable, PAC, but it's the slippery slope to communism. I believe that this exact issue got Karl Marx started on his journey. I should know, we visited his birthplace in Trier, Germany as a family. Be careful.

Well, I asked for an argument and you provided a fine one. I'm not usually moved by slippery slope arguments, but as your credentials are unimpeachable, you've turned me around on this. BTW, this is why I get a free pass on Godwin's Law, as I performed missionary work in Braunau Am Inn, where Hitler was born and, as I was assured by other missionaries, attended Primary in the local branch for a short while, which inspired him to create the Hitler Youth. Don't screw with me when I invoke Nazi parallels.

[byu71]

It would terrible tax policy to tax IRAs over $3 Million, but I'd like to hear the argument against eliminating the tax deduction for contributions to IRAs or other retirement plans once the aggregate amount of all such deferred accounts exceeds, say, $3 million adjusted in the future for inflation. We want to encourage people to save for retirement so they can be self-sustaining in their dotage, but why give a tax break on massive contributions by those who have already saved more than enough to sustain them if they live to be 180? Some defined benefit and other plans allow high income individuals to put away many tens of thousands of dollars on a tax-deferred basis, even if they're already sitting on tens of millions in their tax-deferred accounts.

An interesting argument that kind of ties in with the discussion on ROTH's vs Regular IRA's. Although I don't buy the argument, some on here think the ROTH is a no brainer. I guess we could eliminate the ROTH for anyone who has $3,000,000 total in either or both together.

The argument goes to whether the government wants the taxes now or is willing to wait. Like a child, the government has good ideas, but at some point starts looking for immediacy. Let's get the taxes now rather than wait until the fellow dies or his kids die if he passes the IRA's on. In all reality it just doesn't matter. I think the figure they said they would gain would be about $6 billion over ten years. Whoopee wheesle shit.

However, it does make it not quite a shock when a few years down the line the government decides that if you have over a certain amount in your IRA, they will add a "surplus" tax to your IRA in addition to the ordinary income tax. Australia has just done this.

Until you start actually confiscating assets from people, the rich will always find a way to accumulate wealth. Like I have said before, divide all of the assets Americans own right now and hand it out equally. Within 30 years there will be the those that have and those that have not all over again.

[Moliere]

It would terrible tax policy to tax IRAs over $3 Million, but I'd like to hear the argument against eliminating the tax deduction for contributions to IRAs or other retirement plans once the aggregate amount of all such deferred accounts exceeds, say, $3 million adjusted in the future for inflation. We want to encourage people to save for retirement so they can be self-sustaining in their dotage, but why give a tax break on massive contributions by those who have already saved more than enough to sustain them if they live to be 180? Some defined benefit and other plans allow high income individuals to put away many tens of thousands of dollars on a tax-deferred basis, even if they're already sitting on tens of millions in their tax-deferred accounts.

What do they mean when they say they will tax IRAs in excess of $3 million? IRAs will be taxed when the money is withdrawn so are they just saying they will accelerate the taxation? Do they mean they'll tax even the earnings on Roth IRAs? Seems very vague but maybe there are specifics out there.

I don't think I'd be against a limit on tax incentives for savings plans (I'm also on record as a fan of limits on avoiding death taxes), but I'm weary of what the limit would be. I guess I'm afraid it would be like the AMT where it is set and not inflation adjusted. If they get it right the first time, then so be it. Keep in mind though that this will simply result in a shifting of investment decisions by the wealthy. They'll just invest in other tax deferred items like real estate, or insurance products, or something else....