For Debate: The Government Should Be Overthrown

[The Esteemed Gentleman]

Catchy title, eh? Here is the impetus that led to this question:

In several weeks, I will be leaving my full-time government employment in the legislature of my home state to attend [law] school. Needless to say, [law] school is very expensive. I could really use some extra cash to help supplement my savings. Turns out, I have just over $5,000 in my retirement account, and can either roll it into an IRA or collect a lump sum check. If I roll it into an IRA, it's good as gold and is not confiscated by the state and federal governments. If I decide that I could really use that money now to help pay the staggering costs of graduate school, my government repays me for my dedication to furthering my education and being a good citizen in the following ways:

1. It will be subject to state income taxation.
2. It will be subject to federal taxation.

(Okay, so far, no surprises, I expected that. Not thrilled about it, mind you, but knew it was coming).

3. It will be subject to a 10% excise penalty.

(Apparently, this is because I have the nerve to decide that I know how best to use my own money and not in a way the government has forced me to use it. Still not a shock though, I knew that was coming).

4. Before steps 1 through 3 commense, it will be subject to a 20% federal penalty.

(No idea "why" although my cynical side thinks it's again because I have the audacity to think for myself like a responsible citizen and believe that I know better how to use my own money, which I labored for. But it's okay, right? Other people who aren't doing anything productive with themselves need free health care for their (mostly) self-inflicted health ailments).

Bottom line is that this is thievery, the legal plundering of the people by the government. I'm not "rich." I make $34,650 a year, of which I only take home roughly $22,000 after taxes. Because I live in Massachusetts, I am already forced to purchase some sort of health coverage, lest I be hit with a 4-figure monetary penalty. Usually, I'd accept a "vote with your feet" response, but since the Democrats in Congress seem hell-bent on repeating Massachusetts' mistake, I can't even do that. As it is, the last fortress of anti-taxation in the Union, New Hampshire, has been drifting Left the last decade, and has begun implementing a "view tax" on properties deemed to have a nice panoramic of Lake Winnipesaukee, the Presidential Range, and the like.

And we can add all of the above to the news today that the new health care bill and taxes being pushed through Congress will hit some people in New York City (to cite an example) with an income tax bracket of 57%.

Yeah, cause that's not ludicrous?

Where are these types of public tax and spending policies leading us? The CBO has an answer: on an unsustainable fiscal path.

So where does that leave me? Somewhere around here:

The governments of the united states and those of the several states have become morally repugnant and are operating in a way which is directly opposite to the ideals in which the founding generation threw off the chains of Britain to form a new nation dedicated to the idea of liberty. These governments should be overthrown and replaced with fiscally prudent and liberty oriented systems post-haste.

Perhaps that's just an over reaction from a young 20-something trying to make his way through school so that I can have the solid foundation for a family and secure adulthood, but it seems to me that the way our governments operate are putting my future and the nation's future existence as a whole in extreme jeopardy.

What say you, Liberty Lounge?

[Danoff]

Treason!

I think your case could be made stronger by itemizing the domestic human rights violations our government is responsible for. Our government is absolutely immoral and ignoring the charter designed for it - but it won't be overthrown. The reason is that the majority of people in this country are still voting for the system we have and if they didn't, we'd have the change we want.

In short, this isn't tyranny, this is what the people want. It's not fair, it's not right, it's a tyranny of the majority - but because it's a tyranny of the majority, it's not likely to be overthrown. Maybe like-minded individuals can get together and take away a particular state.

[The Great Catpiss]

We will probably eventually create a new currency and need to remove 2-4 0s...

While it may hurt the poor, the redistribution of wealth that it will cause will greatly help the poor in the long run. I think the gap between wages is getting stretched too far, and will eventually snap.

This wont happen while the world is dependent on the dollar, but I believe a majority of top earning countries want out of the US dollar ASAP. All I can say is, get prepared...

[HughRuss]

You're going about it in the wrong way.

TAship/Fellowship. Viola, you have free education. (Both cover your tuition and will generally give you a 20,000 ish a year stipend, which I'm sure you can live on, unless you have codependents; the Fellowship committees, and the school board that hands out TAships will take this mitigating factor into consideration).

[The Esteemed Gentleman]

Originally Posted by HughRuss

You're going about it in the wrong way.

TAship/Fellowship. Viola, you have free education. (Both cover your tuition and will generally give you a 20,000 ish a year stipend, which I'm sure you can live on, unless you have codependents; the Fellowship committees, and the school board that hands out TAships will take this mitigating factor into consideration).

Er, perhaps I should have been more specific when I said "graduate school" and said "law school" instead. They don't offer those, unfortunately. When I do go for my PhD in Public Law and Political Science after the JD, I had every intention of doing it your way.

[Winston]

Originally Posted by The Esteemed Gentleman

, I have just over $5,000 in my retirement account,

1. It will be subject to state income taxation.
2. It will be subject to federal taxation.

Yes, as ordinary income.

3. It will be subject to a 10% excise penalty.

Negative

4. Before steps 1 through 3 commense, it will be subject to a 20% federal penalty.

Negative

I make $34,650 a year, of which I only take home roughly $22,000 after taxes.

You should seek further reference here.

Publication 970 (2008), Tax Benefits for Education


But, to the negative. That is a ten percent penalty, and it does not apply to "qualified higher education expenses", that's any expense incurred at an institution that accepts federal financial aid. You going to law school in Cuba? If not, I figure you exempt.

However, you can take distributions from your IRAs for qualified higher education expenses without having to pay the 10% additional tax. You may owe income tax on at least part of the amount distributed, but you may not have to pay the 10% additional tax.

Publication 970 (2008), Tax Benefits for Education

You will need to file a 5329

http://www.irs.gov/pub/irs-dft/f5329--dft.pdf

That's a draft, official document has not even been released.



The Hope Credit would more than offset the federal income liability on the five grand. The Lifetime learning credit is two grand, that is a CREDIT toward your tax liability. You use the whole five grand for higher education you are going to REDUCE your tax liability. Tell the damn custodian of the account you spending it on law school, check the box that says NO WITHHOLDING, and tell them to fork it over. Cancel the ammunition order.

[The Esteemed Gentleman]

Originally Posted by Winston

Publication 970 (2008), Tax Benefits for Education


But, to the negative. That is a ten percent penalty, and it does not apply to "qualified higher education expenses", that's any expense incurred at an institution that accepts federal financial aid. You going to law school in Cuba? If not, I figure you exempt.



You will need to file a 5329

http://www.irs.gov/pub/irs-dft/f5329--dft.pdf

That's a draft, official document has not even been released.



The Hope Credit would more than offset the federal income liability on the five grand. The Lifetime learning credit is two grand, that is a CREDIT toward your tax liability. You use the whole five grand for higher education you are going to REDUCE your tax liability. Tell the damn custodian of the account you spending it on law school, check the box that says NO WITHHOLDING, and tell them to fork it over. Cancel the ammunition order.

I hear what you're saying. My dad was adament that there were exemptions for educational purposes, but I checked with two different CPA's, and both said there is no exemption of this kind for the public retirement system in which I am in. So either they are both incredibly incompetent (unlikely, but hey, it's possible) or there is something special about my public pension system that screws me over royally. I have to go back and reread the Retirement Account Handbook they just gave me today and really do so thoroughly, see what I can get out of this. What I was thinking I'd do is roll it into an IRA and then after 6 months or something, take it from the IRA. We'll see, gotta do more talking/reading.

Thanks for the info though.

[HughRuss]

Originally Posted by The Esteemed Gentleman

Er, perhaps I should have been more specific when I said "graduate school" and said "law school" instead. They don't offer those, unfortunately. When I do go for my PhD in Public Law and Political Science after the JD, I had every intention of doing it your way.

Oh, Jesus. You should have said you were en route to your Juris Doctor. I presumed, obviously erroneously, that you were heading toward a political science degree of sorts.

Good luck. You know I agree with your viewpoints on overthrowing the oppressive regime!

[The Esteemed Gentleman]

Originally Posted by HughRuss

Oh, Jesus. You should have said you were en route to your Juris Doctor. I presumed, obviously erroneously, that you were heading toward a political science degree of sorts.

Yeah, that comes next. I'm literally going to be in school for the rest of my life. But it all makes sense upstairs

Originally Posted by HughRuss

Good luck. You know I agree with your viewpoints on overthrowing the oppressive regime!

thanks. viva la revolucion!

[snjmom]

Thats easy. Let R equal the interest rate on a Stafford and RR equal the penalty rate and if RR>R, borrow against the five grand is the correct answer, esp. if you factor in the untaxed income earned between now and when you start paying the Stafford off. You could wind up on the plus side of the equation if you stay in school long enough.

[Danoff]

Originally Posted by The Great Catpiss

We will probably eventually create a new currency and need to remove 2-4 0s...

Looks quite possible.

Originally Posted by The Great Catpiss

While it may hurt the poor, the redistribution of wealth that it will cause will greatly help the poor in the long run.

It would be better for everyone to simply stop destroying the dollar. But I don't see a redistribution of wealth happening from a massive inflation of the dollar. It will disproportionately harm the rich, but the main benefit that you'd get out of it is a devaluing of your debt, which largely helps the rich (rich people owe money too, usually a lot more than poor people).

Inflation is not redistributive, it's destructive. It destroys savings - whether that's the bank's savings or yours doesn't matter. And that destruction isn't good for anyone with the capability to invest or produce (ie: the people creating wealth). But I agree with you that a sound currency would be good for everyone.

Originally Posted by The Great Catpiss

I think the gap between wages is getting stretched too far, and will eventually snap.

That doesn't make any sense to me.

[stolz25]

Originally Posted by Danoff

But I don't see a redistribution of wealth happening from a massive inflation of the dollar. It will disproportionately harm the rich,

Actually, it disproportionately harms the poor. The rich hold the vast majority of their wealth in assets which will appreciate with massive inflation. The poor have much more of there wealth tied up in dollars (be it a bank account or just the paycheck they depend on week to week).

[Danoff]

Originally Posted by stolz25

Actually, it disproportionately harms the poor. The rich hold the vast majority of their wealth in assets which will appreciate with massive inflation. The poor have much more of there wealth tied up in dollars (be it a bank account or just the paycheck they depend on week to week).

I disagree. To first order, people harmed the most by inflation are the people holding the most dollars - that tends to be the rich.

[Winston]

Originally Posted by Danoff

I disagree. To first order, people harmed the most by inflation are the people holding the most dollars - that tends to be the rich.

Deflation strikes fear in the heart of all wealthy people. Why? Wealthy people have a majority of their wealth in assets. Assets produce income or store wealth in proportion to their price. If asset prices fall, their store of wealth, income produced, and relative standing all go down in large measure. Conversely, deflation (as long as it does not crush the economy) favors the working poor, who generally live off of a fixed income as they trade their time and labor for money. The “poor” generally don’t have assets to deflate, and their expenses form a greater percentage of their overall wealth, so the reduction in prices directly impacts their lifestyle. Basically, deflation has the net effect of transferring wealth from the rich to the poor.

Inflation strikes fear in the heart of all working “poor” people. Why? “Poor” people have a majority of their wealth in fixed income streams or cash. This income (job, pensions, etc) is relatively fixed in relation to prices. If asset prices rise, their store of wealth, income produced, and relative standing all go down in large measure. Conversely, inflation (as long as it does not crush the currency) favors the wealthy, who generally live off of income and assets that gain a greater value as prices rise. The wealthy generally don’t have problems with fixed income streams that are penalized by inflation, and their expenses form a smaller percentage of their overall wealth, so the rise in prices is offset in large measure by the rise in the value of their assets.

Basically, inflation has the net effect of transferring wealth from the poor to the rich.

Inflation, Deflation and Wealth Redistribution Read the Prospectus

[stolz25]

Originally Posted by Danoff

I disagree. To first order, people harmed the most by inflation are the people holding the most dollars - that tends to be the rich.

In terms of actually dollars lost, yes, the rich will be harmed the most. In terms of percentage of their total wealth lost, the poor will be hurt worst. However, the first users of newly created money benefit from inflation, and those people are usually the rich.

However, I think we can both agree inflation is bad either way.

[The Great Catpiss]

Originally Posted by Danoff

Originally Posted by catpiss

I think the gap between wages is getting stretched too far, and will eventually snap.

That doesn't make any sense to me.

As the income level of the middle class continues to increase much faster than the income level of the lower class, prices begin to increase. The middle class is willing to pay more for the goods so vendors will sell them at higher prices. Eventually, more and more people wont be able to afford to survive.

If enough people don't make enough money, they will make dramatic change to your status quo (the snap). They might vote some heavily socialist politicians into office, they might commit more crime, or they might riot. You gotta keep the peons happy or they will chop your head off

[stolz25]

Originally Posted by The Great Catpiss

As the income level of the middle class continues to increase much faster than the income level of the lower class, prices begin to increase. The middle class is willing to pay more for the goods so vendors will sell them at higher prices. Eventually, more and more people wont be able to afford to survive.

This is only true if wages are rising because of inflation (which is just another price that will rise when the money is printed). And in that case the middle class isn't getting an increase in real wages, they are merely staying even, while the poor are getting worse off in terms of real wages.

[The Great Catpiss]

Originally Posted by stolz25

This is only true if wages are rising because of inflation (which is just another price that will rise when the money is printed). And in that case the middle class isn't getting an increase in real wages, they are merely staying even, while the poor are getting worse off in terms of real wages.

probably so.

[snjmom]

You gotta keep the peons happy or they will chop your head off

Truer words, sir. Esp with that 2nd amendment.

[thatguyoverthere]

I can understand why you guys would want to overthrow the government. Your political ideas are so useless and so repugnant to a majority of voters that you can't possibly win power through mere democratic means, that's for sure. So, obviously the concept of democracy is anathema to you.

BUt what I'd like to know is this: why don't you guys just start your own country? Personally, I'd annex Mexico and let you guys have Alaska. We can keep our 50 star flag, send the immigrants back home, and let you guys create your tax-free paradise.

Heck, some of you mofo's want to go back in time and kill Abraham Lincoln. If Lincoln was such a bad leader, it should be a cinch for you guys to come up with someone better. If the American government is so bad and evil, you guys should be able to create a better government easily. If the American economy is so unfair and poorly managed you should be able to create a better one and outdistance us economically in no time.

So the question remains: why don't you guys start your own country? Seriously. It'd be a lot easier (and more realisically actually have a chance of ever happening) than overthrowing the US government. Those of us that actually love America would be glad to be rid of you. So why don't you guys finally put your money where your mouths are?