Wednesday, February 02, 2005

The Bush Personal Investment Tax

I was struck by something while reading this post-SOTU Q&A session with the Washington Post's Robert Kaiser (link courtesy The Stakeholder). Read it and then tell me if you don't see the same thing I see.

Albany, N.Y.: What do you make of the "personal" versus "private" accounts sematic battle. I see that your earlier posts have leaned in both directions. Will this battle be settled by such small -- but potentially crucial details?

Robert G. Kaiser: As we've reported, pollsters have discovered that voters are made nervous by the term "privatization of Social Security." So, in the spirit of this plastic age we live in, promoters of changes in Social Security decided to change the terminology they themselves introduced, and refer now to "personal accounts."

Significantly, the senior administration official who briefed today on details of the White House plan on Social Security did make clear that thinking of them as "private" would be a mistake. The governmetn will control the money, the citizen will have narrow choices as to where to invest it, and the government will retain the first three percent per year of all earnings the money accrues (this being the interest paid on the Treasury Bills now in the Social Security trust fund).

So, let's be clear on this. If Bush's plan goes through, the government will put strict controls on how the money in these private accounts will be invested (so much for the "ownership society") and, on top of that, the government will "retain the first three percent per year of all earnings the money accrues".

In other words, the government will TAX the first three percent of interest people earn on these accounts.

That's right! Bush has just proposed a new tax!


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