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When the Cyprus bank crisis hit, this column warned that the precedent set by seizing people’s savings would not be lost on Washington politicians. Hardly had the digital ink dried than President Obama was unveiling his budget proposal to bar people from contributing to their 401(k)s if their plan had reached a certain threshold. Obama and his fellow statists, in their infinite wisdom, have decided what the maximum retirement income should be for you.

While the President’s budget will go nowhere now, this idea is the proverbial camel’s nose under the tent. In the next decade, once a foreign or financial crisis hits you can expect Washington or even statehouses to claw away, Cyprus-like, at your savings–and there are numerous savings honey pots for political bears to break into.

– Social Security benefits. These originally were to go to recipients tax free. After all, you’ve already paid income tax on the money taken for Social Security. But money-hungry pols never let mere promises get in the way of more revenue. Since the 1980s Social Security benefits have been subject to more and more taxation once certain thresholds are reached. The justification has been that the employer portion of the tax is deductible for the employer. That’s a flimsy excuse; most economists agree that levy merely constitutes personal income never received. With Social Security on its way to insolvency, more raids will come in the form of means-testing benefits.

– Roth IRAs. These are especially vulnerable to Cyprus-like depredations. The deal is that you put in aftertax money and get tax-free benefits. When the next crisis hits, expect those benefits to suddenly become taxable. The judiciary isn’t likely to save you when your Roth IRA is under such an assault. On economic policy American courts these days go out of their way to help the government (look at their acquiescence in the Obama Administration’s Third World-like, politics-infested reorganization of General Motors GM +0.33% and Chrysler).

– Life insurance. Permanent policies have a tax-free savings buildup. You pay tax only if you cash the policy in and the proceeds exceed the amount you paid in premiums. Liberals from time to time have proposed taxing this buildup, and in the aftermath of Cyprus they will do so again.

– Variable annuities. These are funded with aftertax income; the buildup is tax free, and proceeds are taxable. These policies would be rendered useless if the tax-free growth were to come under assault.

– Wealth taxes. France and other countries levy taxes when a person’s net wealth reaches a certain threshold. If you think the government is too intrusive now regarding your income, just imagine what it will be like once the IRS hires thousands of additional agents to roam the Internet to discover what you own. States already have a form of wealth tax in their exactions on your house and land. Expect proposals to tax other forms of your wealth–both Washington and the states will find this temptation irresistible. The Constitution supposedly forbids this kind of taxation on the national level, but, as we know all too well, judges and justices take an elastic approach to our basic law. When you hear the words “living Constitution,” clutch your wallets and purses.

http://www.forbes.com/sites/steveforbes/2013/05/08/stealing-your-savings/

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