"In the 2010 tax year, for the first time, there is no $100,000 limitation on the ability to convert IRAs and other tax-deferred retirement accounts into Roth IRAs. ... To convert to a Roth entails paying any deferred taxes now, in exchange for freedom from taxes forever after on principal, income and gains, whether for one's self of one's heirs. ... When the conversions are reported next year in tax-year 2010 filings, that's going to drive hundreds of billions of dollars in unexpected revenue. ... If just 10% of it is converted, then taxes would be paid on $540 billion at a 35% rate-generating a $189 billion revenue surprise for the US Treasury. ... They'll benefit most from paying taxes today while the low Bush-era rates are still in effect, and by avoiding them in the future when soak-the-rich Obama-era rates come in. The USAA poll found that 61% of the highest-earning households planning to convert are thinking along those lines. ... Moreover, critics might point out that the bigger the miracle in the short run, the worse for revenues in the long run", my emphasis, Donald Luskin (DL) at the WSJ, 15 April 2010, link:
"Should anyone be so naive to think that this adminstration won't later change the rules and begin to tax all gains on Roth IRAs for those families making above $250,000 per year?," Dan Agan letter to the WSJ, 20 April 2010, link:
Unlike Lloyd Antoinette Blankfein, who does "God's work", DL does the IRS's. What a fool. Imagine, DL is the chief investment officer of Trend Microlytics (TM). Unexpected revenue, DL? Are you serious?
Agan's an optimist.
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