Dear John: Gas tax hike a smokin’ idea

Dear John: A higher gasoline tax, as you proposed, is a terrible idea. The government should have to prove through audits that it is spending and using its current income wisely.

We all know that’s not going to happen.

This government collects money and puts it in one fund, then funnels it to some other program or project that has nothing to do with the original purpose. Can I say transportation fund, Social Security and hundreds of others?

If it were a private business, its officials would all be wearing jumpsuits behind bars. Anyone who denies this has been smoking too much weed. Tomas

Dear Tomas: How do you know what I’m smoking?

Look, “this” government is our government. And, yes, I distrust “this” government as much as the next guy who has paid into Social Security for 40-plus years, is now getting nothing on his savings because Wall Street needed the money and is tired of unworthy people getting handouts at his expense.
Gotcha! We are all pissed off.

But that doesn’t negate the fact that the recent sharp drop in gasoline prices is the perfect opportunity for Washington to increase revenue with consumers barely feeling it.

Gas prices are rising again, but fell sharply. If the US took a piece of any drop below, say, $2 a gallon, drivers wouldn’t even miss it. And that tax increase goes away if prices go back over $2 a gallon.

This also gives the US government an incentive to keep gasoline prices down. Right now, there is no such incentive. In fact, Washington would just as soon have us use more gasoline, because that boosts tax revenue.

Yes, this new tax revenue should be spent wisely — as I suggested. I think it should go to improve roads and help veterans.

All tax revenue should be wisely spent, even though we all know it isn’t.

Dear John: If I roll over my IRA account from Wells Fargo to my savings account at TD Bank, will the IRS consider that a taxable withdrawal? JMS

Dear JMS: Yes, it would be a taxable withdrawal. And you’d also be hit with a 10 percent penalty if you aren’t at least 59¹/₂ years old.

I’ll let Zachary McGill, director of Joel Isaacson & Co. in New York City, explain:

“You mention two different transactions in your question. The first being a rollover. A rollover is when you move retirement (pretax) money to another retirement account.”

For example, McGill says, if you wanted to move your Wells Fargo IRA to another broker — say Fidelity — you would do a tax-free rollover between your Wells Fargo IRA and a Fidelity IRA.

“The key to this is that the funds come from a pretax account and go into a pretax account, so that you do not need to pay tax and potential penalty on the distribution,” explains McGill.

But if you took that Wells Fargo IRA money and moved it to a regular savings account at TD — or any other regular account anywhere — whammo, 10 percent penalty, plus regular tax!

The penalty goes away when you’re 59 ¹/₂ years old, but not the regular tax.

Dear John: We wanted to get your opinion on the mortgage interest rates this year.

We are looking to buy another house and move, but with two young kids, moving in the winter is difficult.

However, we are very worried about the mortgage interest rates rising this year, since quantitative easing ended.

We live in New Jersey, so as you know, prices in decent neighborhoods are through the roof.

Would you advise us to sell/buy as soon as possible (i.e., the rates might skyrocket 1 percent or more), or should we stop worrying and wait until spring? I & M

Dear I & M: I have no idea what you should do because there’s no telling where mortgage rates will be later this year.

Last week, for instance, rates on a 30-year mortgage went from 3.92 percent to 4.15 percent overnight just because QE was ending. Then people gave more thought to the matter and rates dropped to 3.9 percent.

There is no question that interest rates are artificially low and the bond prices (which move in the opposite direction of rates) are in a bubble that could pop at any moment.

But will that moment come in December or in April or sometime in 2020? Who knows?

One key factor, of course, is what the Federal Reserve says and does. But with the economy still not performing well here or overseas, the Fed is likely to be frozen in place for a while.

But other factors influence interest rates more than the Fed does.

If the world economy, for instance, suddenly booms, all interest rates could rise rapidly. There’s probably little chance of that happening over the next year.

Or if foreign investors — meaning the Chinese — decide they don’t want to buy US government bonds anymore, that, too, could cause rates to rise.

Here’s my personal experience: It’s better to let housing prices rather than interest rates influence your decision. You can never reduce the amount you paid for a house. But if you get a higher-than-necessary interest rate, you can always refinance when rates come down if you stay in the house long enough.

In other words, a bad purchase price is forever. A bad interest rate can be changed.

And when rates do go up, housing prices will come down.

Send your questions to Dear John, The New York Post, 1211 Ave. of the Americas, NY, NY 10036, or [email protected].