Replace All Federal Taxes on Income with the Fair Tax Act , HR 25
FairTax and Roth IRA's....
Hello FairTax Supporters....
Can anyone answer these questions?
**Is there any reason to think that Roth IRA's won't be negatively impacted by the FairTax?
**How are IRA's, both Traditional & Roth, affected by the FairTax?
THANK YOU!!!
Can anyone answer these questions?
**Is there any reason to think that Roth IRA's won't be negatively impacted by the FairTax?
**How are IRA's, both Traditional & Roth, affected by the FairTax?
THANK YOU!!!
Replies to This Discussion
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Permalink Reply by Joe McCune on
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If the major concern is the perception of double taxation, point out to them that they can pay the FairTax, or stay with the old system and let the government have half of it when they die and try to pass it on to their heirs. Now that's double taxation.
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estate tax - it is a killer!
Thanks Joe
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Permalink Reply by Nancy L. Gatchel on -
We mustn't forget that monthly prebate check those retirees will be receiving. Fair Tax time is just around the bend; I feel it in my bones. Politicians are literally going to force us to it, whether they like it or not.
Though I'm watching this conversation, admittedly it's over my head. However, I learn from you folks. Keep it up.
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Permalink Reply by Sean Fagan on
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Wow - what a great debate!
I can only offer my own personal take on the subject.
Beginning next month I will reach that magical age of 59 and a half. That means I can legally start drawing funds from my retirement account (its a traditional IRA, not a ROTH). I will pay taxes on any of the funds that I withdraw.
Now, just how much do you think I care about that my $1 "wiget' includes embedded taxes or a nrst just as long as I am paying the same amount for it? That would be about ziltch.
Admittingly, ROTH type people do stand to lose, but as someone else pointed out the tax code can be changed at any time for whatever reason. And as Nancy pointed out - don't forget the prebate. When you get to retirement age, you don't go off spending your money on "exoctic" stuff anyway.
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Permalink Reply by Randy Stone on
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Those who have a Roth IRA most likely (for as long as it lasts anyway) will draw Social Security as well. They must remember that under the Fair Tax, SS checks will not be taxed anymore! And as Nancy reminded us, the prebate is an advantage for retirees too.
We can bicker about these little details to death, but the REAL PICTURE is that everyone will be much better off after the Fair Tax than they are now. I have $20 in my pocket to spend and it was obtained prior to the FT, do I fuss about the fact I already paid taxes on it! No, because America is finally back in the hands of Americans and the Political tax games are over!
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Amen, Randy.
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Here! Here! (or is that Hear, Hear?) Either way, I second that!
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Permalink Reply by Tony on
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Well....if the retired folks don't want to pay the taxes again......they can buy used goods!!
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Sorry Tony, kinda hard to live on used food and energy. But, they could always limit their spending to the poverty level or below. That way all the taxes they pay would be covered by the prebate.
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Permalink Reply by Randy Stone on
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you do not buy anything today tax free. There are imbedded taxes in everything. And Washington is very good at inventing new ways to tax goods and services now.
Under the FT, at least all spending up to the poverty level (which would cover your food so it is not "used") would be tax free.
In addition, now any pension and social Security checks are taxable income. After the FT, no income is taxable. So regardless of any savings prior to FT, everyone will benefit greatly after FT
Tony's point is that YOU are in control of your spending and therefore in control of how you pay tax. Under the present tax code, Washington is in total control and you have no say in the matter.
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I read this thread and the answers provided are not good enough.
ROTH IRA's are a problem that has to be equalized for the FAIRTAX to be fair.
I have Traditional IRAs. I have ROTH IRAs. I don't plan to retire for 20 years. Existing tax law allows me to convert my Traditional IRA to a ROTH IRA by paying taxes on those dollars now. I have done this because 20 years of tax free growth is worth the up front taxation.
Understand. I am sitting on six-figures of promised tax free money. This has to be equalized. If the FAIRTAX were voted into law (which I'm in favor of), the ROTH (and any other current tax-free investment like Muni-Bonds) must be tax exempt money.
Not to complain without offering a solution. We give everyone a pre-bate based on the number of dependents. When one withdrawls money from a ROTH IRA, the amount of the pre-bate goes up by $X a month until the tax has been equalized. Simple. One form. All handled by the brokerage. No immediate windfall budget implications for the goverment as the tax is refunded over many months.
People are looking for a reason to oppose the FAIRTAX. Don't give them the ROTH.
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I couldn't agree more. I think it could be overcome with extra pre-bate money based on a calculation.
I know that the Roth is great for middle income wage earners from my own experience. As I've started my own business and my company income has risen, I have found that the 401K or SEP route to be most advantageous due to avoiding employment taxes on what I contribute. That is not available to most people, the majority of Americans. So although it wouldn't affect me that much right now, I think that it would be a huge issue for most people; this is the biggest hurdle for being fully on board with the fair tax. Not out of selfish reasons but what is best for the country as a whole.
It might not be double taxation but is is definitely twice taxation.
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