Bad Assumptions, Bad Government

George Scorse of the LA Times is worried that the government will not get enough money when Roth owners retire. (Apologies–the piece is still listed in the LA Times, but the link is down right now.)

In the long run, turning billions of dollars from tax-deferred to tax-free savings will be a huge loser for Treasury. My colleagues at Tax Policy Center figure that, through mid-century, allowing unlimited Roth conversions will reduce federal revenues by $100 billion.

Scorse is referring to the fact that since 1997, Congress has allowed people to invest in IRAs that reverse the normal order of taxation.  Whereas regular IRAs are tax-deferred (taxes are owed when the money is withdrawn), the Roth IRA is funded with after-tax money–the investor pays taxes now, but none later.  Scorse seals his argument with the thin wax that follows.

Whatever the answer for individuals, there’s little doubt that Roths are wrong for America. They’re Frankensteins, fated to wreak havoc. It’s time to retire Roth IRAs.

Wreak havoc on whom?  This disturbing assumption among the political class and its apologists to presume that the individual belongs to the state and that the state decides how one’s income is to be meted out is becoming commonplace.

For example, a Federal Judge ruled recently that “mental activity” is subject to legislation because not doing something is the same as choosing to do something.  Thus per the Commerce Clause of the Constitution, Judge Gladys Kesler reasons, one may be regulated in thought as well as action.

The sophomoric nature of this argument is overwhelming.  Were I to have suggested such in one of my philosophy classes, I would have been sent for remedial instruction in logic.  This morning, I choose to write this blog, which precludes my choosing to do any number of other things, such as working out or painting all my books red and placing them in stacks of three on street corners due north of the house until I run out.  Bad enough that the Commerce Clause regulates activities that should be left alone.  Regulating lack of activity is just another way of saying that anything can be regulated–anything at all.

Both arguments are based on a collectivist premise.  “America” is better off when the government gets more of your money through taxation.  Yet what is “America” but a collection of its individuals?  “America,” as envisioned by Scorse, would be better off if everyone just gave everything to the Treasury.  Surely something has gone wrong here.

Likewise with the Obamacare ruling.  When stretched to fit non-action, the Commerce Clause becomes a presumption that the individual has no tangible safe-haven from the insatiable appetite of the state.

The leftist arguments that characterize our present track in this country are riddled with holes.  The current administration has woven into its collective consciousness collectivist presumptions that make one shudder when brought into the light.  One need not argument against them as much as expose the underlying premises.  If liberals believe these arguments to be sound, let them enumerate what else is implied.  I doubt their enthusiasm remains when the state knows no limits at all.

About Terry Noel

I am an Associate Professor of Management and Quantitative Methods at Illinois State University. My specialty is entrepreneurship.
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