Belmont Club

"Fabulously Wealthy"

When Barack Obama debated  “Joe The Plumber” the candidate put his philosophy of taxation this way to the aspiring small businessman:

Obama: Why don’t you want me to tax the rich? I want to tax the rich so the poor can get rich quicker.

JTP: What happens when I get rich?

Obama: Why, the good news is you’ll have gotten there faster.

The verbatim conversation went this way:

Joe: … and I’m, you know, buying this company and I’m gonna continue to work that way. Now, if I buy another truck and adding something else to it and, you know, build the company, you know, I’m getting taxed more and more while fulfilling the American Dream.

Obama: Well, here’s a way of thinking about it. How long have you been a plumber? How long have you been working?

Joe: Fifteen years.

Obama: Okay. So, over the last 15 years, when you weren’t making $250,000, you would have been getting a tax cut from me. So you’d actually have more money, which means you would have saved more, which means that you would have gotten to the point where you could build your small business quicker than under the current tax code. So there are two ways of looking at it. I mean, one way of looking at it is, now that you’ve become more successful…

Supposing Joe the Plumber actually got rich. Here’s what’s in store for him. As The Hill reports, “Obama budget to take aim at wealthy IRAs”

President Obama’s budget, to be released next week, will limit how much wealthy individuals – like Mitt Romney – can keep in IRAs and other retirement accounts.The senior administration official said that wealthy taxpayers can currently “accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving.”

Under the plan, a taxpayer’s tax-preferred retirement account, like an IRA, could not finance more than $205,000 per year of retirement – or right around $3 million this year.

Bill Maher, in a moment of lucidity, told Larry King that maybe the reason Joe the Plumber wanted fewer taxes was because in the end he would have to pay more taxes. Therefore he needed to save more for his retirement to compensate for the fact that they were going to take his retirement money away from him. So he wanted to start saving more before it was too late.

But maybe it’s already too late.

The shorthand for this process is ‘Cyprus’. Marc Faber, a financial pundit at CNBC recently predicted that what occurred on the Mediterranean island would “happen everywhere in the world, in Western democracies”.  There was simply no other place for government to get money except by taxing wealth. So they were going to do it. “If you look at what happened in Cyprus, basically people with money will lose part of their wealth, either through expropriation or higher taxation”.

And sure enough the trend is global. Australian Prime Minister “Julia Gillard has failed to rule out if Labor will raid superannuation funds in the May budget, saying any decisions made for the sector will be in Australia’s long term interest.” That means she’s going to do it.

It will interest Americans to note that according to the Australian Labor party, being “fabulously wealthy” means A$2 million in lifetime savings.

Are you fabulously wealthy? Are you planning on becoming fabulously wealthy anytime soon?

Forget the anxiety about government coming for your guns. It’s your money they’re interested in. The gun part is just to make the money part easier. And if they can’t get the bucks one way, they’ll try another. “French President Francois Hollande declared on Thursday that companies would have to pay a 75 percent tax on salaries over a million euros after his plan for a “super-tax” on individuals was knocked down by the constitutional court.”

But there’s no need to worry. Julia Gillard said “we have created a scheme which gives working Australians the opportunity to look forward to a decent retiring income.  You can always trust Labor with superannuation”.

The Three Conjectures at Amazon Kindle for $1.99
Storming the Castle at Amazon Kindle for $3.99
No Way In at Amazon Kindle $8.95, print $9.99

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