Obama Proposes Retirement Account Limit In First "Wealth Tax" Salvo

Tyler Durden's picture

The witch-hunt against the "rich" (as defined by a random group of people) through the establishment of creeping global capital controls continues. First, it was Europe deciding that €100,000 in savings is the "fair" threshold on savings above which any haircut goes, with Cyprus demonstrating first. and next Italy making it clear local depositors above the threshold will also be impaired in the future; then a group of journalists mysteriously lands millions in top secret files exposing essentially every offshore bank account: a perfectly legal option, however when mixed in with the implication that this money is all tax-evasion gotten it provides for a combustible mix, and now it is America's turn to fire the first shot across the capital control bow, because as part of his proposed budget, Obama plans to set a limit of how much one can spend per year on retirement through tax-preferred retirement plans. As it turns out, according to the Obama administration it is only fair to spend a total of $205,000 in nominal dollars per year on retirement, but not more.

Per The Hill, "The proposal would save around $9 billion over a decade, a senior administration official said, while also bringing more fairness to the tax code." Ah yes, "fairness." This means that as a result of the artificial limit, the Budget will set a total cap on retirement plans of about $3 million. Anything above that, feel free to please spend on your peas instead of saving, or just invest in Bernanke's stock market ponzi. After all, that is the only artificial indicator Obama has to point to, when "proving" his policies are working.

Of course, once the administration's destructive policies of attempting to inflate away the debt finally funnel through to the economy, and inflation explodes, that $205,000 may or may not be enough to buy a loaf of bread. But why pretend to even think logically or ahead at this point. It's not like anyone has any real plans about the future of the country when the president is actually willing to release statements like this: “Under current rules, some wealthy individuals are able to accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving."

Why thank you Mr. President for telling the people what you consider "reasonable." Of course, it would be so much below you to simply go on the record as saying the rich (arbitrarily chosen as those who have over $1 million in assets... or $500,000... or $50,000 - who knows, it's "arbitrary") are now fair game and all those who recently received an Obama phone would be legally excused if they were to accidentally eat them. Because all is fair in hate and class warfare.

And speaking of hate, that is precisely the cover that Obama will use to pass his proposal:

The most prominent taxpayer with a multimillion-dollar IRA is Romney, the 2012 Republican presidential nominee and co- founder of Bain Capital LLC. Romney disclosed in public filings during the campaign that his retirement account held between $18.1 million and $87.4 million. At one point, the maximum exceeded $100 million.


IRAs have evolved from a retirement-planning technique into an estate-planning tool for some wealthy families because tax laws allow the accounts to be passed on to heirs, said Ed Slott, an IRA specialist and certified public accountant based in Rockville Centre, New York.


“Over the last election it hit a critical mass when a lot of people found out that Romney had $100 million in his IRA,” Slott said. “People thought, how on earth did that happen? I think that was the tipping point.”


The Romney campaign didn’t explain how he amassed that much money in an IRA when contribution limits are much lower. Most taxpayers can contribute a maximum of $5,500 for 2013. Older workers, self-employed workers and those who save through 401(k)-style plans have higher caps and can roll those accounts into IRAs.


One possibility is that Romney included Bain investments valued at close to nothing that later grew exponentially. The value would increase tax-free in the retirement account and would be subject to taxation at ordinary income tax rates when taken out.

Of course, the outcry from those who are stupid enough to actually save cash instead of blowing it all on iPhones and other worthless gimmicks will be loud, but since they are outnumbered about 9 to 1 by those who have zero financial planning skills, zero savings but lots of debt, will be promptly drowned out.

We wonder if the administration be as forceful in limiting the net present value of public worker retirement pensions (funded by other taxpayers of course), already over $500,000/year in some cases, with the same passion as it has in going after private wealth. Or maybe because the purchasing of votes with other people's money might be impaired, Obama will just let this slide?

Finally, like everything out of the administration, there isn't actually a plan on how to do this:

The administration’s statement didn’t explain in detail how the proposal would work. The cap would apply to the total of all of an individual’s tax-favored retirement accounts.

So all up in the air and very much unknown. But what is very known is that the tax on the wealthy, which by definition has to be global in nature, is rapidly coming, and the only question is at what threshold of total taxable financial assets it will be arbitrarily set.

However since we predicted all of this in September of 2011, and did some math to go along with it, expect to hand over anywhere between 30% and 40% of your hard earned assets to whatever parasitic government happens to be your host (this of course, after being taxed on the cash flows used to generates these assets).

Because in the new socialist international normal, "it's only fair."

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blindman's picture

Caldwell Chronicles
Friday arpil 5 4:00 pm

Guns and Butter
Friday april 5 9:00 am
earl talking eyewitness history.

LasVegasDave's picture

Re Guns:

In the end it will be much more lucrative to pass on the tax deduction and invest after tax dollars in brass and lead.

.308, 9mm, .45, 7.62 x 39, .223.  It doesnt matter. When they come to confiscate your 401k, or tell you your pension has been lost by Mr. Corzine that tax deduction you got isnt going to offer much comfort

Stoploss's picture

So there is no confusion..




Keep it up.

CH1's picture

Step 1: Clip the rich. (The envious buy-in.)

Step 2: Redefine "rich"

Step 3: Repeat.

CrazyCooter's picture

Otherwise known as "we are all millionaires now".



EDIT: While we are on the subject:

I had this discussion a while back with some liberal minded people. "Tax the millionaires" they cried, "they deserve to pay more."

I don't think they understood my relatively simple response, "We are all millionaires now".

It appears to me that the AMT is one of those taxes that really makes a lot of sense if one needed the tax revenue streams AND knew the dollar will inflate into oblivion. Admittedly a bit long on the horizon, but be that as it may.



Note to ZH staff: can't link to comments on subsequent pages (i.e. I can't link to my comment directly as it is on page 2 and the ?page=2 part seems to break it)

redpill's picture

Apparently I have an inadequate understanding of how retirement accounts work, isn't there already substantial caps on the amount you can contribute to a 401(k) or IRA each year?  I always cap out at $6k or something and the a-holes won't even let me have a Roth anymore.

rajat_bhatia's picture

"America - Land of the Free" LOL, 


I always wonder about the extent to which black culture of degradation, immorality, jealousy, failure and glorifying filth, would succeed in pervading American life.

dark pools of soros's picture

the Jews didn't wonder, they knew and did a damn good job opening the gates

Pool Shark's picture

You're referring to all those Jews who died in Nazi concentration camps, of course...

SafelyGraze's picture

we need to go ahead and agree *now* on what constitutes wealth

measured in dollars

let's say 200k

then we need to go ahead and agree *now* on what consitutes fair taxation on the wealthy

let's say a meager 40%

then we need to go anead an kick-start price and wage inflation so that the median individual income is higher

let's say 250k

everyone will be wealthy, to the benefit of all


whotookmyalias's picture

Must be nice to believe you are some sort of demi-God who is the only one qualified to define "reasonable", "common sense", "fair" and "majority of americans".  If you take away his ability to define those terms, his agenda becomes crystal clear to those with purple kool-aid clouded vision. 

Big Slick's picture

To quote Ann, "Unless you can stand in front of it and protect it with a gun, you do not own it."


Richard Chesler's picture

Not long now before we find out about limit exceptions granted to "Friends of Obozo"

Beam Me Up Scotty's picture


we need to go ahead and agree *now* on what constitutes wealth

measured in dollars

let's say 200k

then we need to go ahead and agree *now* on what consitutes fair taxation on the wealthy

let's say a meager 40%

then we need to go anead an kick-start price and wage inflation so that the median individual income is higher

let's say 250k

everyone will be wealthy, to the benefit of all"

Thats why we have the alternative minimum tax.  It nets more and more people every year.  Soon everyone who pays taxes will be paying the AMT.  And yes, everyone will be in the highest tax bracket.

tenpanhandle's picture

I own a wall and will stand behind it with a gun.  That still counts, right?

insanelysane's picture

While you are at it, make sure to include that no public worker can have a salary or a pension that exceeds the 200k limit.  And throw college professors and administrators into the 200k cap as well.


I don't grasp how the government and other peices of societal shit believe they have a right to other people's money.  The article states the government as saying that they will save X billions of dollars.  I am not comprehending how it is "costing" the government money when people have their money in a retirement account.  ???


Vashta Nerada's picture

I can guarantee you that public sector unions will be exempt from this confiscation. When they come to take our retirement money, I hope they come prepared to use force.

GeezerGeek's picture

Few people keep their retirement funds at home, or anywhere else they can be defended. When they decide to take the retirement money, mostly 401Ks and IRAs, they will go to the companies that run those, like Fidelity, Hartford, Prudential, etc. Then it will be a simple matter of transferring digits via some network. Just like taking money from a bank account.

The only way to use force, then, would be to camp out near your representative's or senators' houses or offices, which will of course be well guarded after the first couple of attempts. That would be a fool's errand, so how do you intend keeping any retirement funds where you can guard them?

BoNeSxxx's picture

Three words:

Open Opportunity IRA

Anonymous peon's picture

Why would they need to use force, you got it stuffed in your mattress?

Renewable Life's picture


Your confusing the word "cost" with "potential tax revenue"!  You see, Government at EVERY level starts from the premise, "they" are entitled to X amount of the money that exists in "their juristiction"! And when I mean exists, I mean fucking exists, not spent, or circulated or invested, but exists!  Now depending on the political slant of the majority that controls that govt juristiction on any given year, the % of the entitlement (taxation) fluctuates! 

So you see, the mentality of Govt is......if you start from this premise that "they" are entitled to 100% of the money that exists, regardless of where it is, who has it, how it was made, etc.......the word "cost" makes perfect sense. 

Example; Betty Bo and John Doe have a million dollars in total assets, total taxation on that money for 2012 was 50% and the government got $500,000 of their money!  However, John and Betty discovered a LEGAL tax loophole and they lowered their tax bill to $380,000, keeping $120,000 more OF THEIR MONEY! 

The local/State/Federal government officials will describe that example this way....."Even though Betty Bo and John Doe used a legal tax deduction, we need to close that "loophole", which COST us $120,000 in potential tax revenue last year"!!!!

Gringo Viejo's picture

If I hear the word "fairness" from these communist assholes one more time, I think I'll vomit.

dicktator's picture

reistence is futile, all your assets belong to us - history teaches us that communists are masters in stealing (and killing - watch out for drones if you refese to pay)

tickhound's picture

Yeah your little homie capitalist faggots have proven to be such a benefit to humanity... All u freakin cavemen.... I swear. If I had a nickel for everyone of you dumbasses who think we can just GROW our way out of this.... Well, they'd take those nickels too, eh? Our problems are MONETARISM, and ANY derivative of it.

dark pools of soros's picture

we should go back to paying for things with chickens and goats

CheapBastard's picture

<<Of course, the outcry from those who are stupid enough to actually save cash instead of blowing it all on iPhones and other worthless gimmicks will be loud, but since they are outnumbered about 9 to 1 by those who have zero financial planning skills, zero savings but lots of debt, will be promptly drowned out.>>


Says it all.

HardAssets's picture

Economist Yuri Maltsev called O a long time Marxist recently. Since Maltsev worked for Gorbachev in the USSR, he likely has a pretty good idea of what a communist looks like.

paradism_'s picture

One Nation, Under Control.

HardAssets's picture

"One Nation, Under Control."

Well, the Pledge of Alligence to the Flag was written by a communist.

Urban Redneck's picture

There are statutory caps (based on the type of account and level of taxpayer AGI) as well as plan caps and matching caps at the corporate level.  Realistically the only way he get to $100 million in an IRA would be from the ROLLOVER of a 401(k)/SEP/SIMPLE plan into the IRA.    

Bicycle Repairman's picture

This isn't about fairness or the rich.  It's about collecting taxes from the people that are the easiest to tax.  The limit will be ratcheted down until it hits what is left of the upper middle class. 

IRAs and 401-Ks were set up to:

1.  Allow the discontinuation of defined benefit plans

2.  Have a large pool of money that cannot be easily accessed and is right out in public.

There's no collecting taxes from the rich.  Forget about it.  Taxes are for little people.  Little people who have wealth.

redpill's picture

They were also set up as a giveaway to big financials, where would they be without "retirement account planning" services in which they give you a stupidly limited number of lame mutual fund options that all suck and then charge you for the pleasure?  At least in terms of a lot of the company plans.  Essentially it's a scam to cram as much money into the big financials as possible.

As far as the tax code goes it's no different than AMT or any other "accidental" arbitrary dollar amount cutoffs; they are all pre-baked to automatically ensare more tax payers every year due to inflation.  Automatic tax increases without having to pass anything!  Assholes.

Pool Shark's picture



Only $205k a year in retirement? Really Mr. President?

If so, I guess you'll be volunteering to take a pay cut?

btw, what's the value of that lifetime Secret Service protection you just signed into law for yourself?


F***ing hypocrite...


Pool Shark's picture



btw, how do you figure $205,000 annual return on a mere $3 million investment?

At the current 10-year treasury yield of 1.70%, that's only $51,000 a year in interest. [Thanks for the ZIRP, Ben.]



francis_sawyer's picture

Perfectly said PS... [12:09]

hound dog vigilante's picture

IRA's are meant to be drawn down to $0 in retirement... $205k/year from $3mil = 15 yr retirement.  

so we can expect the next obamacare surprise to be annual death panel interviews for folks over 80 yrs old, who will be out of money and crippled by heath care costs... it's only fair to cull the old/sick herd. logan's run for grannies.

millions of americans still defend obama's every move. we have a long way to go yet before the restoration...


WillyGroper's picture

Me thinks age is not going to be a factor. They're already denying chemo based on cost to medicare patients. Ah heck, what's 15 yrs?

imaginalis's picture

Or 488 years if you are Mitt Romney.

Abrick's picture

A PC version of "Logan's Run".

HardAssets's picture

O is just a teleprompter reader, a complete economic dolt who would rather play golf or hoops. That was obvious when the subject got onto economics during the first election. Your anger is justified, but wasted on him.

Freddie's picture

Billionaires will be exempt.  Hopefully many upper class and middle class CS'ers who voted Islamic and helped rig the 2008/2012 elections will get hit hard.  All of TV and Hollywood will run their 24x7 propaganda saying it is the fair thing to do.  Nice job by the CS'ers who voted for this.  F you and F TV and Hollywood. .

Renewable Life's picture

and if you dont believe this, just ask the average, unconnected, Cyprus citizen or depositor, that had more then $100,000 Euro????

HardAssets's picture

IMO this is about impoverishing the people so that they are eventually completely dependent, thus easily controlled. Welcome to the new global serfdom.

Fredo Corleone's picture

This "proposal" will not see the light of day -- nor shall the forthcoming White House budget proposal in whole, for that matter.

IRAs and other tax-deferred savings retirement plans have been under assault since Reagan's TRA '86 cave. This harassment is nothing new, and should not dissuade individuals from continuing to save: provide for oneself in retirement.

redpill's picture

Agreed, better to put your money somewhere the feds can't get their filthy hands on it so easily anyway.  I grudgingly participate in my 401k because of company matching, otherwise no way, I'd pay these bastards their pound of flesh through taxes and do what I want with my money from there, thanks.

Meat Hammer's picture

Besides, the true goal is to take back the House.  Democrat strategy is to propose these ridiculous bills knowing full well that they won't pass so they can call Republicans the party of the rich. They'll give this bill a fancy name like the "Protect Grandma and Grandpa Act" and then accuse Republicans of hating grandparents when it fails.  

francis_sawyer's picture

It doesn't matter...


These 'salvos' are just a way of laying down straw [mixing metaphors here] to boil frog slowly so that when the day comes to steal everything, people will behave like Cypriots...

HardAssets's picture

'Dem' versus 'Repub' is a diversion, a b.s. circus act

They work for the same team - the criminals (corporate & government types at the highest levels) against the rest of us who they leech off