In just another example of the federal government cooking their books in ways that the SEC would say are criminal, lets look at the Roth IRA conversion.
Individuals are flocking to convert their traditional IRA’s to a Roth, paying full current income taxes on the amount converted in exchange for the potentially huge benefit of never having to pay taxes on future distributions – neither on the principal, nor any income or gains earned in that account.
But what is really going on here? The taxpayer is simply being asked to pay now for a tax bill that is not due until well into the future. This “advance payment” is indisputably simply a loan to our government. But the federal books do not reflect it as a loan – it is reflected as a tax receipt. If that is not bad enough, the “interest cost” on this tax receipt – the foregone tax on all the income that will ever be earned on that account – will never be recorded as a cost at all!
The effect of this is that future generations will lose the revenue from these IRA conversions since the taxes are being collected now. This creates lower tax receipts for our children and grandchildren, who will undeniably be saddled with incredible tax burdens to make up the difference.
Yes, our deficit and debt burden is again being increased in a deceitful way – so what else is new?