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Business, Economics, Finance

The Number of People With IRAs Worth $5 Million or More Has Tripled, Congress Says

Photo Credit / Morgan Housel / Unsplash

The number of multimillion-dollar individual retirement accounts has soared in the past decade, as more wealthy Americans use the tax-advantaged vehicles to shield fortunes from income taxes, according to new data released by Congress today.

The data reveals for the first time the staggering amount of money socked away in tax-free mega Roth accounts: more than $15 billion held by just 156 Americans.

Originally published by ProPublica. ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.Series: The Secret IRS Files Inside the Tax Records of the .001%

The new data also shows that the number of Americans with traditional and Roth IRAs worth over $5 million tripled, to more than 28,000, between 2011 and 2019.

The data was requested by Senate Finance Chairman Ron Wyden, D-Ore., and House Ways and Means Chairman Richard Neal, D-Mass., following ProPublica’s story last month exploring the rise of mega Roth IRAs. The story, based on confidential IRS data obtained by ProPublica, revealed that tech mogul Peter Thiel has the largest known Roth IRA, worth $5 billion as of 2019.

In a Senate Finance hearing on retirement on Wednesday, Wyden said such massive accounts underscore the country’s inequalities. “Individuals at the very top — at the very, very top — are able to game the rules to get ahead and basically abuse taxpayer-subsidized accounts with pricey accountants and lawyers,” Wyden said. “This increases the already existing retirement inequality between retirement haves and have-nots to an extreme level.”

Roth IRAs were established in 1997 to incentivize middle-class Americans to save for retirement. Congress imposed strict limits, including a cap on how much can be contributed to the accounts each year, which today stands at $6,000 for most Americans. The average Roth account was worth $39,108 at the end of 2018.

But a select set of the ultrawealthy have managed to get around limits set by Congress and transformed the vehicle into a powerful onshore tax shelter. One way they’ve done that is by buying nonpublic shares of companies with extremely low valuations. That allows them to tuck a huge volume of shares into a retirement account. Congressional investigators have previously found that the IRS has struggled to enforce rules around these investments, including whether the valuations are legitimate.

Once money is deposited into a Roth account, any proceeds from investment gains are tax free. So, for example, a Roth owner who sells a successful tech investment for a $1 million profit gets to keep all of the money, saving a potential $200,000 in federal taxes. The savings can then be reinvested, tax free, as long as the Roth holder waits till he or she is at least 59 and a half before withdrawing the money. Owners of traditional IRAs, by contrast, enjoy tax-free growth but must pay income tax on withdrawals. The Roth is considered the more powerful tax-avoidance tool for the wealthy.

The latest numbers come from analysts at Congress’ nonpartisan Joint Committee on Taxation. They update a widely cited study from the Government Accountability Office that released figures on large IRAs in 2011.

The new figures show that, as of 2019, nearly 3,000 taxpayers held Roth IRAs worth at least $5 million. (The total of more than 28,000 people holding IRAs of that size includes both traditional and Roth IRAs.) The aggregate value of those Roth IRAs was more than $40 billion.

Both Wyden and Neal said in statements that the new figures show the need for reform. Neal said that “IRAs are intended to help Americans achieve long-term financial security, not to enable those who already have extraordinary wealth to avoid paying their fair share in taxes and deepen existing inequalities in our nation.” Neal said earlier this month, in the wake of the ProPublica article, that the Ways and Means Committee would draft a bill to “stop IRAs from being exploited.”

For his part, Wyden said, “As the Finance Committee continues to develop proposals to make the tax code more fair, closing these loopholes will be a top priority.” Wyden first proposed an overhaul of IRA rules to prevent the accounts from being used as large tax shelters several years ago. One reform that is being discussed would prohibit investors from putting assets that are not available to ordinary Americans, such as shares of startup companies, into retirement accounts.

Wyden and Neal’s push for reforms comes as Congress is considering bipartisan retirement legislation. The bills are being pitched as helping ordinary Americans save for retirement, including by proposing to automatically enroll workers in employer-sponsored retirement plans. But they also include perks for the retirement and financial industries, such as relaxing rules in ways that are seen as a boon for insurers. And buried deep inside the two complex bills are provisions that could make it harder for the IRS to crack down on the ultrawealthy who dodge tax rules.

by Justin Elliott, James Bandler and Patricia Callahan for ProPublica and published via Creative Commons License

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Breaking News, Climate Solutions, News, Observation, Politics

It’s time to face it: Politicians that propagate Disinformation for the Fossil Fuel Industry are Wrong and Evil, Period

If four years of the Former Guy taught us anything, it’s that we have no time left for evil, soulless greed run amok

– Opinion & Analysis –

Recent attempts by politicians, beholden to the fossil fuel industry in Texas, to use the collapse of the energy infrastructure during the recent weather disaster as an opportunity to bash and trash wind and solar energy is an example of an unfortunate, banal and still common form of pure evil.

The deeper connections, easily seen lurking just beneath the surface, are rich and multilayered.

If this extreme weather disaster is one of many that are linked to climate change, a manifestation of dangers that climate scientists have been warning of for decades, the irony goes beyond just sick.

Wind and solar energy exist as an early and tentative positive step toward somehow stopping, or at least slowing down, the negative man-made climate change repercussions before it is too late.

The real reasons behind the Texas power grid collapse are related to traditional fossil fuel based energy sources and bad management of the energy infrastructure that can be traced back to an arrogant belief that Texas is better off without connections to the national system.

The local political response to this eminently preventable catastrophe was to bash and trash and blame the very technology that, ultimately, is part of a tentative start to actually begin to solve the bigger problem of man-made climate change.

…the time is gone to accept “two sides” to an argument that, by postponing any real solutions, will kill us all.

Just as the history of the internal combustion engine and the fossil fuel and auto industry’s attempts to prolong its near monopoly, using disinformation and other tactics for over 50 years was evil, the anti-sustainable energy politics in Texas today is just a continuation of that effort.

The time is gone to accept “two sides” to an argument that has one side trying, by attempting to postpone any real solutions, to kill us all, in the name of short term greed.

Under unique circumstances lending legitimacy to evil is too costly to condone

Looking at “both sides” of an issue is a practice based on a theory that “reasonable people” can disagree on diametrically opposed views. This idea is often suspended, however, by unreasonable people for their own reasons. That is sometimes called “war”.

Reasonable people, people, for example that understand climate science and want to prevent the total destruction of the earth and the extinction of all inhabitants, are often reluctant to suspend this idea of “good people on both sides” by their very nature as caring individuals.

“Now we need to understand that the “silence of one good man” can spell disaster for all good people. Each of us who remained passive as our impending disaster continued might have been the one “good man” who didn’t act, didn’t speak out, didn’t resist…

— Elayne Clift in Salon

Now is a time when huge changes are going to be forced by an external and highly powerful and dangerous threats to our survival. The changes that are needed involve radically new ways of thinking and acting across many spheres of activity.

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New technologies, such as the aforementioned wind turbines and solar collectors, new forms of transportation, new ways of looking at other causes of, and remedies to, the excessive expulsion of carbon into the atmosphere will be absolutely required.

The truth is that for these new ways of thinking and acting to take over in human commerce the old ways must be cancelled. With extreme prejudice.

The past and those that want to go back to it are a lost cause, unfortunately

Many many “rich” people will be unhappy about this. And they will have politicians in their pocket that will gladly spread lies and disinformation to try and sustain the sick, evil gravy-train of polluting, carbon spewing systems as long as possible.

Sick and evil, not because those ways of surviving for humanity, burning fossil fuels and using them for a million different things that were a benefit in the short term, but because the short term is over.

The various arguments that somehow it is a good idea not to change and for the changes to slow down and not step on any toes as they gradually become “viable” have zero validity as of today (really as of 25 years ago but that’s water under the bridge).

Eventually the climate itself will kill them for their mistakes. Unfortunately it will also kill the rest of us if we allow them to continue to postpone positive change with lies and disinformation.

– D.L.

There must be an understanding among “reasonable” people, people who want to be part of an urgent crusade to save the world, literally, that points of view and the people who espouse them represent evil, plain and simple.

They will scream that reasonable people are “femi-nazis and “eco-terrorists” and say and do whatever it takes to protect what’s left of a deadly status quo. But they are wrong.

Eventually the climate itself will kill them for their mistakes. Unfortunately it will also kill the rest of us if we allow them to continue to postpone positive change with lies and disinformation.

“Every one of these people is the banality of evil personified. Every one of them became what Arendt called a “leaf blowing in the whirlwind of time.” Now every one of them bears responsibility for what could lie ahead.”

— Elayne Clift in Salon

This change in thinking about how to respond to this kind of evil will be a more important factor in the survival of humanity than all the technological advances combined.

“World War III is a guerrilla information war with no division between military and civilian participation.” – Marshall McLuhan (1970), Culture is Our Business, p. 66.

–Marshall McLuhan

“Info-wars” were predicted as the battlefield of WWIII by Marshall McLuhan in 1970 and now we are in it and there must be an understanding of what is at stake.

When disinformation is used as a perennial weapon against positive, necessary change it is necessary to do more than disagree. It is necessary to expose the lies and, more importantly, the obvious sick and criminal motives for the lies. Over and over as often as necessary.

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