What does one do when one has a truly revolutionary idea?
Blog? here? Maybe. It's better than trusting some Washington intern not to bury it. I certainly don't have time to publish one of my snarky, politically satiric futuristic romances on the matter. So here goes.
President Obama promised not to raise taxes...ok on 95% of America. But his Administration needs funds. The States need money now... California, Michigan. The cities and townships and municipalities need money. Everyone wants to raise taxes, and appears to see no alternative.
I have one, and it involves cutting taxes and still bringing the taxing authorities a massive one time cash infusion in 2010.
In 2010, for reasons I won't go into, it is advantageous to convert IRAs into Roth IRAs. This involves pre-paying vast sums of taxes in 2010 at the time of conversion, and most people will not do it, based on their life expectancy and their terror of what might happen if health care does end up being rationed, and their fear that Roth IRA law might change.
Say a retiree has $1,000,000 in an IRA . (Just for the sake of a round number.) That's pretty much all he has to live on if social security goes bust, or if Medicare cuts don't cover some catastrophic, unforeseen illness, and he might live another 35 years. If he converted the IRA to a Roth in 2010, he'd pay income taxes now --for the 2010 tax year-- of around 450,000. The Roth would be after tax dollars, so he would not be taxed again on that money or distributions.
That's a potential mighty shot in the arm for federal, state and local government. It seems to me, it would make sense for politicians to offer a bounty (hey, they are letting the IRS forgive huge sums to pitchmen on TV and their delinquent clients).
Give retirees with IRAs a one time incentive to convert their IRAs to Roths. It would be a tax cut! Add iron clad protections for Roths, to assuage their fears. Maybe, designate some of the "tax cut" as a rollover health care spending account managed by the retiree or his designated care-giver.
Isn't that truly Revolutionary?