In response to Peter Thiel playing games with his Roth Ira to turn two thousand dollars in a startup stocks into 5 billion dollars tax free, laws have been proposed to close the loophole.
The real problem is the Roth IRA. It's bad policy, imposing costs in the future, and it encourages this sort of rich pig bullsh%$, and it is structured to ensure that it benefits those who have the most monehy to invest.
Placing a monetary limit on Roths is a good start, but wait, here come the lobbyists.
It appears that wealth managers everywhere are very aware of this dodge, and desperately want to keep charging their clients to provide it to them:
The Democratic plan to crack down on individual retirement accounts worth hundreds of millions, even billions, of dollars and to tighten the rules governing IRA investments is facing intense opposition from several industry groups seeking to kill or soften the proposed reforms.
Several retirement industry firms, including one backed by tech investor Peter Thiel, who amassed a multibillion-dollar IRA, have mounted a lobbying push against the plan, disclosure filings show. They have hired an array of former Capitol Hill staffers, a former congressman and at least one former U.S. senator to fight efforts to rein in and regulate the accounts.
ProPublica reported in June that, as of 2019, Thiel had $5 billion in one of the tax-advantaged accounts, which were originally intended to incentivize retirement savings by the middle and working classes. Other superrich Americans have also protected large fortunes from taxation using the retirement vehicles. Income generated inside an IRA is not taxed and, in the case of a Roth IRA such as Thiel’s, withdrawals are also tax-free once the owner reaches the age of 59 and a half.
As an FYI, that's in about 5 years for Thiel, who as I have mentioned before, is a literal vampire.
In response, Democrats on the House Ways and Means Committee included a proposal to curb mega-IRA accounts as part of the package of social spending and tax changes being debated on Capitol Hill. The House proposal would effectively cap the total amount someone could hold in a Roth IRA at $20 million and compel the holders of the giant accounts to withdraw anything over that limit. “Incentives in our tax code that help Americans save for retirement were never intended to enable a tax shelter for the ultra-wealthy,” Ways and Means Chair Rep. Richard Neal, D-Mass., said earlier this year. “We must shut down these practices.”
The fact that Richard Neal, who is one of the biggest corporate whores in Congress, and even he things that something needs to be done.
The proposal would also bar IRAs from making certain nonpublic investments, an area that congressional investigators have flagged as ripe for abuse. Purchasing shares of startups through an IRA has become popular among the founders of Silicon Valley companies. Buying difficult-to-value shares at extremely low prices can sidestep IRA contribution limits and potentially generate massive tax-free growth.
Among the companies lobbying on the proposal is San Francisco-based Forge Global, which runs a marketplace for shares of private companies and also has a division that administers IRA plans. Forge hired lobbyists from Allon Advocacy in September, including former staffers for Sen. Rob Portman, R-Ohio, and former Rep. Gary Ackerman, D-N.Y.
Thiel was one of the early funders of Forge, and it regularly touts its connection to him in press releases. Forge CEO Kelly Rodriques was previously the chief executive of an IRA company formerly called Pensco. Pensco was the custodian of Thiel’s giant IRA for many years, ProPublica previously reported.………
Several other retirement industry companies are also mobilizing to fight the proposal by backing a new group called the Individual Retirement Rights Association. It was formed in late August in Delaware, state records show. It hired the firm Crossroads Strategies to lobby on the IRA proposal. Disclosure filings show a team of eight lobbyists working for the group, most notably former Sen. John Breaux, a Democrat who represented Louisiana.
After leaving the Senate in 2005, Breaux launched his own lobbying outfit with retired Republican Sen. Trent Lott of Mississippi. When in Congress, Breaux once famously commented that while his vote could not be bought, it could be rented. Crossroads didn’t respond to a request for comment.
Also jumping in are, former Senator Max Baucus, the Retirement Industry Trust Association, the Koch funded Taxpayers Protection Alliance, and former Representative Ben Quayle.
It's like a f%$#ing hit parade of corrupt ex-politicians f%$#ing profiting off of the f%$#ing revolving door.
Our system of government in all of its splendor.
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