I’m cited some remarkable examples of Orwellian language abuse.
- The World Bank published a study of national tax systems and countries with higher tax burdens were rewarded with a grade of “high effort.”
- A German bureaucrat accused a Czech politician of “obstructing the democratic process” for blocking a treaty, even though voters weren’t allowed to vote on the treaty in 26 out of 27 EU nations.
- American politicians, including President Obama, deliberately cause confusion by referring to tax provisions as being forms of government spending.
I prefer the honest approach. If you believe in bigger government and higher taxes, you should “man up” and openly express your views. Don’t dissemble, prevaricate, mislead, and obfuscate.
The same is true, by the way, for advocates of individual freedom and smaller government. I’ve always admired Barry Goldwater, who famously wrote, “I have little interest in streamlining government or in making it more efficient, for I mean to reduce its size. I do not undertake to promote welfare, for I propose to extend freedom. My aim is not to pass laws, but to repeal them.” There’s no ambiguity in that statement!
Anyhow, we have a new entry in this contest for the most egregious use of Orwellian word games. And, not surprisingly, it’s by a statist.
Fred Hiatt, the editorial page editor of the Washington Post, wrote a column claiming that people are getting an entitlement if the government doesn’t double tax their retirement savings.
This spring Obama proposed a cap of about $3.4 million on how much people can save in their tax-advantaged IRAs and 401(k) plans… Obama isn’t keeping people from saving as much money as they can or want. The question is how much the rest of us should have to chip in. Obama is suggesting that at some point retirement accounts, invented to encourage working people to set aside enough for their sunset years, no longer need a helping hand from taxpayers. …The entitlement culture…runs deeper than the entitlement programs we normally think of, like Medicare and Social Security. …Now it’s the top one-thousandth demanding their right to tax breaks for socking away unlimited wealth in retirement plans.
There are several things about these excerpts that rub me the wrong way.
First, IRAs and 401(k)s are not “tax advantaged.” They’re tax neutral. These vehicles exist so that people don’t get double taxed on their savings. As I explained last year.
If you have a traditional IRA (or “front-ended” IRA), you get a deduction for any money you put in a retirement account, but then you pay tax on the money – including any earnings – when the money is withdrawn. If you have a Roth IRA (or “back-ended” IRA), you pay tax on your income in the year that it is earned, but if you put the money in a retirement account, there is no additional tax on withdrawals or the subsequent earnings. From an economic perspective, front-ended IRAs and back-ended IRAs generate the same result. Income that is saved and invested is treated the same as income that is immediately consumed.
But let’s set that aside. My main gripe with Hiatt’s column is that he wants us to think that people with IRAs and 401(k)s are getting “a helping hand from taxpayers” and that this is part of an “entitlement culture.”
This is statist nonsense. If somebody has an IRA and 401(k), they’re saving their own money. There’s no obligation being imposed on me or any other taxpayer.
But Hiatt presumably thinks that the government’s decision not to impose double taxation is somehow akin to a giveaway. But that only makes sense if you assume that government has a preemptive claim to all private income.
And if you have that bizarre mindset, then I guess it makes sense that IRAs and 401(k)s are part of the “entitlement culture.”
In other words, Hiatt wants us the think that there’s no moral, ethical, or economic difference between giving person A $5,000 of other people’s money and person B being allowed to keep $5,000 of his or her own money.
But if that’s true, why bother producing and subjecting yourself to stress when your reward is punitive tax rates? Why not participate in the easy side of the “entitlement culture” and simply take other people’s money?
In the real world, of course, that leads to policies with ever-growing numbers of people choosing to ride in the wagon and fewer and fewer people pulling the wagon.
A liberal seeing that cartoon would exclaim: “How, cool! Effortless prosperity for most! What’s not to like!”
But the cartoon shows only the beginning of the end of the welfare state, a short transitional time, not the final end. The beginning of the end is the point where the cart still has some momentum from people who pulled in the selfish past and so life is still pretty good on the still moving cart. That is what I would call “the age of the smorgasbord”, the short lived age America is currently consuming. That is the age of “Hey look how much wealth has selfish capitalism accumulated. I’ve seen the light! Let’s just become a welfare state and consume over a few short years the advantage accumulated through our longer self-centered history”. In short, the age of HopNChange. The age of hope that you can change into Europe and not decline. Life will be good for a few years as those who pulled can now jump into the still moving cart. But you don’t exit this path.
So the welfare state does not end as the cartoon shows. Life gets progressively worse in the entitlement cart, as the cart loses speed, stagnates and then good luck getting the majority passengers with the atrophied bodies to come down and pull again. A few enthusiastic young fools get of, try to pull, too hard, overtaken by other carts anyway, they jump back into the cart and tell the others: “Don’t even try it. Not worth it”. Soon fewer and fewer even attempt to get of.
…More ominously, huge carts carrying three billion awakening emerging world citizens are barreling down the same alley. The fewer than one billion western world voter-lemmings are voting themselves into becoming road kill. If you think it is the next generation’s problem, think again. All things human are now irreversibly accelerating. So there is a God after all: Those who cause the decline will also get to experience it. Things that never happened before will happen…
Who is John Gault?
I have two ladies working ofr us as caregivers. Last year they paid NO tax from their income other than Social Secrurity and Unemployment, but in filling out their tax returns, both received a “refund”. One received over $600! Meanwhile, I had to pay an additional $3000 in my tax return (and a penalty to boot) because I had not accounted for the amount I was paying out in their SS/FICA as what the government terms an “employer”. What a wake-up call.
[…] that there should be double taxation of income that is saved and invested. As such, they list IRAs and 401(k)s as tax expenditures, even though those provisions merely enable people to avoid being […]
[…] An assumption that IRAs and 401(k)s are loopholes to be eliminated, when they’re actually ways to protect against double […]
[…] the statists at the Washington Post will agree, writing that folks with IRAs are getting “a helping hand” from the […]
Excellent post! Always read your new ones via email but this is one that really hit home for me.
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I can’t think of too many better examples of how the left is good at playing word games to advance their interests instead of arguing based on policy merits.
To put it in honest terms:
The government isn’t “helping you” by allowing you to *keep* what you already had to begin with.
There’s nothing “entitled” about claiming a right to keep what you acquire from people who willingly gave it to you through trade.
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Sometime in the near future there needs to be some kind of organization that would be the NRA for IRA-style retirement. An organization that both encourages people (especially youth) to start IRAs and learn how to wisely build them, as well as lobby politically to keep the laws towards IRAs from becoming more restrictive.
Come to think of it, I should probably forward this idea to a handful of Libertarian listserves and see what fruit starts to bear…
Was it not the idea to help the present White House cronies to convert IRA;s and 401 k’s into government bonds so they can continue the handouts as long as possible? Moreover increases in the FBI, IRS, FEMA camps and all other snoopers jobs, to detect domestic terrorist, are they not a small price to pay to usher every one into the glorious future arising at the (ever receding) welfare state HORIZON?