Recently by Simon Black: Can I Stop Taking Off My Shoes Now?
Following in the footsteps of a rather ignominious list of nations like Argentina and Hungary, the government of lreland is set to take its ‘fair share’ of private retirement funds.
Drowning in debt and faced with unpopular, unrealistic, ridiculously unpopular austerity measures, the government has announced that it will now tax private pension savings in order to raise 470 million euros (roughly $675 million) per year… a lot of money in a country of only 4.4 million people.
Somehow, the government expects to be able to create 100,000 jobs to bring down an unemployment rate at 14.7%. Perhaps they plan on hiring 100,000 new workers to go around the country and collect the tax.
It reminds me of what I saw in Bolivia a couple of weeks ago – there’s a tax or toll or fee for nearly everything you do. Driving on the highway (if you can call it that) outside of Santa Cruz, you pay a toll… obviously not for the maintenance of the road, but to pay the salary of the toll collector.
At the airport, you have to pay an airport tax before departure… obviously not for the upkeep and efficiency of the airport (it took 2 hours to make it to my gate), but to pay the salaries of the guys who collect the airport tax.
This is what politicians consider ‘job creation,’ yet these positions only serve to destroy value. That they would stick up the retirement funds of hard working people is even more immoral.
Here’s the best part, though. If you are a government worker in Ireland, your pension is exempt. They’re only going after people in the private work force. It’s truly disgusting logic to force private workers to pay for years of political incompetence while absolving government employees.
Coincidentally, there are a few other loopholes as well, particularly for non-residents and non-resident funds. Apparently those Irish who saw the writing on the wall and got busy moving themselves and their assets offshore will get to keep all of their savings.
Ireland is not the first country to call this play, nor will it be the last. Pension funds are attractive targets for politicians who have wide eyes and the most carnal thoughts at the site of any large pool of cash.
Think it can’t happen where you live? Think again. Late last year, the French government went through an elaborate process to change its pension laws, ‘legally’ allowing politicians to steal retirement funds from the public in order to pay off other debts.
In the US, public pensions have been raided for years, Congress routinely ‘borrows’ from Social Security to make up budget shortfalls. This is what talking heads mean when they play down concerns of a $14 trillion debt “because we owe it to ourselves – ” $4.6 trillion of the debt is owed to intragovernmental agencies like Social Security.
Chances of this money being repaid to Social Security in full? Slim. The trend is more debt, not paying off existing debt. In fact, I’m convinced that politicians have their eyes firmly fixed on the trillions of dollars in private, individual retirement accounts (IRAs) in the United States to fund new spending.
Here’s how it will go down:
First, there will be some event… some sort of financial cataclysm, similar to the market meltdown we saw in 2008 after Lehman.