Oct

6

 I wonder how wealth will end up being sheltered if/when our betters on the Dem side implement their wealth taxes.

In particular:

1. Would wealth taxes be imposed upon funds in currently tax sheltered retirement plans–IRAs, 401Ks?

2. What about cash values inside life insurance policies?

3. What about an income-paying annuity that has no official cash value?

Conceivably life insurers and sellers of annuities could be big beneficiaries of the Warren trade.

Whenever elimination of the death tax is proposed, the life insurers reliably roll out arguments against rocking the boat.

James Goldcamp writes:

I recently had similar thoughts.

It's seems if the wealth tax reached low enough those historically rather poor vehicles, income paying annuities, would have a proper place in financial planning. It could be that moves to protect the "net present value" of a future fixed pension (which they would never attack due to union support) would be analogous to protecting such annuity vehicles. Re 401K I think the cynical calculus will be how many voters will be ensnared in the scheme. It's relatively rare for an employee to have say over 10M in a 401K due to contribution limitations (and limitations on the rate of compounding) so they don't risk alienating many voters with a high limit. Drop that down to 1 or 2 M and I suspect you would risk a rebellion among many middle/upper class constituents. Interestingly uncle Joe's stepped up cost basis on estates proposal probably casts a wider net than the Native American candidates "2 penny tax" since it's not uncommon for middle class people to inherit long held stocks from parents.


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1 Comment so far

  1. William J Herrmann on October 7, 2019 1:23 pm

    James’s comment on elimination of step up basis on estate assets would be a reasonable way to increase income tax receipts while leveling the tax burden between wealth classes.

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