Monday, April 26, 2010

The Federal Government and breach of contract:

The Federal government has passed a plethora of laws concerning how and when you can contribute to a retirement plan, either an employer plan approved by Uncle Sam, or a 401K through a financial institution. Way back when, it also set up a “Social Security” program that supposedly was to supplement income when one retired.

Many pages of legislation are devoted to how you could contribute and when you could draw from such a plan. It specified how pre tax and taxed contributions were to be handled. In essence, this was a contract between the individual and the government. The Social Security plan was another. A contract is just an agreement by two or more parties to abide by the terms of that contract. When you entered the Social Security program (involuntarily) or signed up for a 401K or employer’s retirement plan, you were essentially entering into a contract with the Federal government.

Which brings us to the question: If the Federal government at a later date acts to tax the proceeds of such a contract, is it not a breach of that contract? Social Security payments at one time were not considered taxable income. Congress decided to tax SS payments as income. Now Nancy Pelosi wants a Windfall Tax on Retirement Income. Her reason?’

“We need to work toward the goal of equalizing income.”

So, aside from suing the government for breach of contract, lets take 2/3 of Ms. Pelosi’s income and divide it between two illegal aliens. Her income would then be “equalized”.

It is so sad that every step the Federal government takes that results in inflation essentially robs those individuals on a fixed income of some of their purchasing power. Take for example someone retiring in 1990, receiving perhaps $1000 a month from SS, and another $750 in retirement pensions. That individual would have to come up with an additional $1225 in 2010 to have their purchasing power the same as in 1990.

In other words, on a fixed income, only approximately 60% of the buying power of 1990 remains. Is it any wonder than many elderly are choosing between fuel and food in the wintertime, or between cat food and bread in the supermarket? And now they want another tax?

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