Obama's wants to cap tax credits on IRAs (Page 4)

The Fed has destroyed the Muni market

No, the purpose is to raise additional revenue by penalizing people who contribute more than $3M in their 401k's.  When people don't put more money into their 401k's to exceed the $3M due to the new changes then the government doesn't receive additional revenue which was their goal.

I use the analogy of California where they raised taxes on the rich to increase revenue, but the end result was an overall reduction in revenue.  Laffer curve in action.

Well government does not get anything now so even if your right nothing changed for them really. 

You would say that money would not get taxed either way.  I am confused where does the money go?  If I would have put in 5 mil into my ira but now I put in 3.  Where does the other 2 mil go and why would it not be taxed?  If I earned it in wages I would pay income tax on it and if I put it into some money market or something I would pay taxes on capital gains right?

A wealthy individual who would normally put the extra $2M in their IRA for tax free gains would now put it elsewhere.  Could he put it in an investment that incurs tax penalties, absolutely.  I would venture that he will seek out other tax deferred investments to put the money.  If there are none, she may choose to leave it in cash and not invest it at all, due to horrible market returns which hurts the economy even more. 
My overall point was simply that due to the basic economic Laffer Curve theory, increasing taxes causes individuals to shift their money around to more advantageous places.  It's never as simple as raise taxes and get X amount of new money.

You say tomato, i say tomahto.  lol.

So if the net result of them making this change increases the $ an individual has to send to the government, then what exactly is the difference?

lol, my business partner is a big "physical gold" guy.  I've been telling him for quite some time it's nothing more than a hype bubble that's going to pop.  We shall see...

Yep.  It's about 19% of GDP.  No matter the top tax bracket the effective tax rate remains about 19%.

My assertion is that it will result in little if any new tax revenue for the government because the people it applies to will shift their money around.  They may get a quick hit for the people that are in this situation that can't easily move their money out of their IRA, but very little new investment over $3M will occur going forward, thereby resulting in little, if any long term revenue for the government.

If you're referring to the negative rate of return comment I made, I was referring to long term tax revenues.  If I put $10M in my IRA over my lifetime then I will pay taxes on it when I withdraw it which is where the government gets their tax (traditional IRA).  If I am capped tax free at $3M for contributions then I'll shift the additional $7M to different (potentially more tax advantageous) investments which would reduce the amount of $ the government gets long term.

That's not entirely true.  When you put money into a traditional IRA it goes in tax differed.  It then gains money over your lifetime and when you pass the age of retirement you can make withdrawals.  Those withdrawals are taxed at your regular income rate, so if you have $10M in your retirement account odds are that you'll be in the highest tax rate for most of the money you take out.

Now with a Roth IRA, you put in post tax dollars and they are not taxed at retirement when you withdraw the funds.  So, in a bubble the Roth IRA would fit your assertion a little better, but I think the annual Roth contribution limit is something like $5k so it would be really hard to get it up over $3M.  With a traditional IRA there are a lot of other mechanisms to get larger dollar values into it such as 401k rollovers from a company etc...

Ah, my apologies.  I read two or three articles on this subject in the last few days and one of them was talking about taxing what's in an existing IRA as well as the contributions.

I'll still say that people with that kind of dough are likely business owners and will still shift things around, even on the front end.  For example, I own a business and I pay myself a salary and max out my IRA contributions.  I'm nowhere near any maxes, but if I were, I would shift things around as to how I get paid in whatever way was most advantageous from a tax standpoint.

Even if I did just pay regular taxes on it today there's a chance that the government would get less revenue today than they would when I pull it out in retirement, but that's just a guess on my part.

I wonder if it is $3m per person, or per household.  I'm guessing it's another marriage tax for successful couples. 

Could you please point to the article where the President is quoted saying that statement?

“Prohibit Individuals from Accumulating over $3 Million in Tax-Preferred Retirement Accounts. Individual Retirement Accounts and other tax-preferred savings vehicles are intended to help middle class families save for retirement. But 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. The Budget would limit an individual’s total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million for someone retiring in 2013. This proposal would raise $9 billion over 10 years.”

http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/budget.pdf

I bolded that one line above.  If only we could return to the golden era of '01 to '09 when there was no division and everyone got along so well. 

Please, this sounds like manufactured outrage to me.  Perhaps you could re-state what the administration said with a bigger emphasis on the word "tax-preferred?"  There would be a limit on tax-preferred accounts.  Nobody is taking your money.  They are basically saying if you've got $3 million in tax-preferred accounts, that's enough.  You can have the rest in accounts that aren't getting such a nice deal from the government.  

I think we can agree to disagree on this issue.  btw, I do not believe 42% of Americans prefer socialism to capitalism.  I will say a majority of Americans believe in capitalism with common-sense limits.  Ya know, those pesky limits that help prevent us:  from having too much wealth accrete to the top, from having the middle class deteriorate, and from decreasing the odds of upward mobility for the poor.