Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 01-07-2008, 10:51 AM   #61
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 514
Quote:
Originally Posted by youbet View Post
Quote:
Originally Posted by kombat
1. Today's generation is more heavily taxed than their parents were.



Generally not true here. I help my son with his taxes, using TruboTax most years. I see no difference between the tax tables/formulas for him as compared to the tax tables/formulas for me. They're the same. No separate tax tables for old folks and young folks.
Sorry, perhaps I should've been clearer. I was referring to the taxes boomers paid in the same stage of their lives as their current children are now. During the "wealth accumulation" phase, boomers were burdened with lower taxes than their children currently are, making it easier for them to accumulate savings.

Please correct me if I'm wrong, but weren't property taxes, income taxes (I'm speaking about the percentages here, not just the absolute amounts which obviously would've been lower simply due to inflation), capital gains taxes, and social security premiums all much lower back in the 60's and 70's?

Quote:
Originally Posted by youbet View Post
(Housing) Again, not true here. No discounts for being over a certain age being granted.
This seems to have been written under the same misunderstanding. I'm referring to the Boomers' cost of housing when they bought them compared to a young couple starting out today, trying to find a house. As a multiple of their income, Boomers had cheaper housing, in my opinion.
__________________

__________________
kombat is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-07-2008, 11:00 AM   #62
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,281
Quote:
Originally Posted by kombat View Post
My argument boils down to the following assertions:

1. Today's generation is more heavily taxed than their parents were.
Really? Marginal rates today are at historically low levels, aren't they? What were they 30 years ago?
Quote:
2. Housing is currently more expensive, as a percentage of one's income, than it was for baby boomers.
Houses today are much bigger on average, and better equipped than 30 years ago. Central air, granite, dishwasher, Microwave, big screen TV. etc, etc, etc - not as common in the 70's. Hey, a 'Harvest Gold' refrigerator was really 'up-scale'

Quote:
3. The current generation faces higher costs for health-care, combined with the double-whammy of needing to care for aging parents.
Well, my parents (and my In-Laws) had to care for their parents - but it looks like my parents (and my In-Laws) will be self sufficient. Is there a trend here? I think you need some data to back that up.

Higher cost for health care? Sure, but we also have procedures that were unavailable 30 years ago. Would you rather undergo a triple by-pass today, or one in 1977? You have the option of an organ transplant if you need it - our parents/grandparents probably would have just died. I like options, but they do cost money.

Quote:
4. The current generation's employers have cut back retirement benefits, shifting the burden for retirement savings onto the employees, rather than offering the traditional pensions that their parents benefitted from.
Well, (I think youbet has pointed this out before), this could be a blessing in disguise. Some of those pensions were cut - if you HAD to save it yourself, you would have the money. In the long run, the money to fund those pensions came out of your paycheck one way or the other. Just like SS, I'd rather have the money in my own name.

I feel much more secure with my 401K and personal money, than I do with SS or the retirement benefits that my company 'promised' me.

-ERD50
__________________

__________________
ERD50 is offline   Reply With Quote
Old 01-07-2008, 11:08 AM   #63
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by kombat View Post
Please correct me if I'm wrong, but weren't property taxes, income taxes (I'm speaking about the percentages here, not just the absolute amounts which obviously would've been lower simply due to inflation), capital gains taxes, and social security premiums all much lower back in the 60's and 70's?
Gosh kombat, I recently destroyed my old tax returns. I actually had them going back to the 60's. So I can't go look at the tax tables and see what the brackets and marginal rates were. I don't remember them being less than today's highly favorable rates. In fact, I can say today's rates are more favorable than those of a few years ago, just can't remember exactly what they were many, many years ago. Perhaps you can google up some info?
Quote:



This seems to have been written under the same misunderstanding. I'm referring to the Boomers' cost of housing when they bought them compared to a young couple starting out today, trying to find a house. As a multiple of their income, Boomers had cheaper housing, in my opinion.
I suppose it would vary from area to area. I can only give an anecdotal example from my own experience. My first job out of college paid $11k/yr. Shortly thereafter, I paid $34.5k for a 3 bdrm/1 bath house with few amenities and needing some repair. So, I gave 3.1 X annual for my home. Today, new grads in my field start at a minimum of $50k/yr in similar Megacorp situations. 3.1 X $50k = $155k. In our area, you can still buy a 3 bdrm/1bath home with few amenities and needing some repairs for that amount. That's just how it worked for me here in northern Ill.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 01-07-2008, 11:17 AM   #64
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,281
Quote:
Originally Posted by kombat View Post

I was referring to the taxes boomers paid in the same stage of their lives as their current children are now. During the "wealth accumulation" phase, boomers were burdened with lower taxes than their children currently are, making it easier for them to accumulate savings.

Please correct me if I'm wrong, but weren't property taxes, income taxes (I'm speaking about the percentages here, not just the absolute amounts which obviously would've been lower simply due to inflation), capital gains taxes, and social security premiums all much lower back in the 60's and 70's?
OK, you are WRONG. I wish it wasn't so, I would have had a lot more money to invest in the bull market of the 90's.

I just dug out my 1982 tax return - my income had just started jumping at that point, I was married and my wife worked, no kids.

rounded:

AGI: $53,400

Taxable Income: $41,100 (no added credits)

That put me in the (hate to disillusion you) 39% marginal tax bracket.

Your turn - Figure the inflation adjusted level for a 2-income, no kids equivalent today, and see if the rates are much different.

OK, here's a start - 2007 Tax Rates:

* 10% on the income between $0 and $15,650
* 15% on the income between $15,650 and $63,700; plus $1,565.00
* 25% on the income between $63,700 and $128,500; plus $8,772.50
* 28% on the income between $128,500 and $195,850; plus $24,972.50
* 33% on the income between $195,850 and $349,700; plus $43,830.50
* 35% on the income over $349,700; plus $94,601.00

I don't even see a 39% in there - so you can save yourself the trouble of adjusting for inflation. Even a ridiculous 8x for inflation would put you at 33% - heck you guys are getting a bargain, and complaining about it. Give me a break.

I think you guys have a serious case of 'the grass is greener' syndrome. Get over it - seriously. It's self-defeating.

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 01-07-2008, 11:21 AM   #65
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,107
Hey, ERD. Don't forget to tell them we had to walk to school barefoot...in the snow...uphill both ways.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 01-07-2008, 11:22 AM   #66
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 514
Quote:
Originally Posted by ERD50 View Post
Really? Marginal rates today are at historically low levels, aren't they? What were they 30 years ago?
To be honest with you, I don't know. I wasn't around, but I was under the impression that income tax was a relatively new creation (a "temporary" war measure) that was much less burdensome than later rates in the 80's and 90's. Also, did capital gains tax even exist in the 60's? And Social Security was lower too, wasn't it? After all, back then, people worked till 65 and died after 10 years. People are retiring earlier and living longer, so hasn't that added cost been reflected in the tax burden?

Quote:
Originally Posted by ERD50 View Post
Well, my parents (and my In-Laws) had to care for their parents - but it looks like my parents (and my In-Laws) will be self sufficient. Is there a trend here?
The plural of "anecdote" is not "data." Suffice to say, parents end up caring for their children. While the boomers may have enjoyed a period of unprecedented prosperity in accumulating a nest egg their own parents couldn't have afforded, it remains to be seen if they are capable of making those funds last, or if they squander them early and become burdens to their children.

Quote:
Originally Posted by ERD50 View Post
Higher cost for health care? Sure, but we also have procedures that were unavailable 30 years ago. Would you rather undergo a triple by-pass today, or one in 1977? You have the option of an organ transplant if you need it - our parents/grandparents probably would have just died. I like options, but they do cost money.
True, but it's the current generation that is bearing that cost. That's my point. Boomers are done making income, and are thus also done (for the most part) paying taxes. Yet they're the ones consuming all these fancy, expensive new medical procedures. This effect is of course less prominent in a country like the US with private health care than it will be in my own (Canada) with socialized health care.

Quote:
Originally Posted by ERD50 View Post
Well, (I think youbet has pointed this out before), this could be a blessing in disguise. Some of those pensions were cut - if you HAD to save it yourself, you would have the money. In the long run, the money to fund those pensions came out of your paycheck one way or the other. Just like SS, I'd rather have the money in my own name.
Yes, youbet had an excellent point, in that at least my generation knows that there is no safety net, and can plan accordingly. However, I disagree with your assumption that the difference is being forwarded on to the employees. My own experience shows that companies are cutting expensive pension plans, and rather than giving the money to the employees, they are instead claiming it as extra profit and giving it to shareholders. Employees' salaries do not rise commensurate with the cut to pension benefits. They are instead expected to fend for themselves, with the same amount of money that their pensioned predecessors had to work with - an obvious disadvantage, in my opinion.

Quote:
Originally Posted by youbet
I don't remember them being less than today's highly favorable rates. Perhaps you can google up some info?
I suppose that would give us a conclusive answer. Maybe if I have some time later I'll dig in and do some research. No doubt it'll be extremely difficult to compare marginal rates across eras, income stratas, and geographic regions (hence my procrastination in actually digging up some hard numbers).
__________________
kombat is offline   Reply With Quote
Old 01-07-2008, 11:23 AM   #67
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,281
I won't do the whiole 1982 table, but it STARTS @ 12% above $3,400


25% above 20,200

39% above 35,200

44% above 45,800

49% above 60,000

and - hold onto your hats -

50% above 85,600

yep - dem were da good old days. Wanna trade?

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 01-07-2008, 11:25 AM   #68
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,281
Quote:
Originally Posted by REWahoo View Post
Hey, ERD. Don't forget to tell them we had to walk to school barefoot...in the snow...uphill both ways.
You got to walk? I had to pull the milk wagon into town, sell the milk, then come home and feed the cows. Slacker!

-ERD50

PS - this was before the invention of the wheel - milk wagons are a bummer to drag!
__________________
ERD50 is offline   Reply With Quote
Old 01-07-2008, 11:26 AM   #69
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 514
Quote:
Originally Posted by ERD50 View Post
OK, you are WRONG. I wish it wasn't so, I would have had a lot more money to invest in the bull market of the 90's.

I think you guys have a serious case of 'the grass is greener' syndrome. Get over it - seriously. It's self-defeating.
OK, you looked at one class of taxation. I listed several others. What were the capital gains rates in 1982? What was the property tax rate, as a multiple of home value? What were the Social Security premiums, as a percentage of income? (I'm not sure that even makes sense - are Social Security costs buried in your regular taxes? I'm Canadian - we pay separate premiums for Canada's version of Social Security).
__________________
kombat is offline   Reply With Quote
Old 01-07-2008, 11:27 AM   #70
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Thanks for digging out that old tax return ERD50! I really did get rid of my stuff earlier than the late 90's just over the past couple of weeks. Tax records, brokerage information, records from buying our first house in 1971, etc., etc., all into the wood stove!

I also went through the boxes of crap I brought home from MegaCorp when I retired 18 months ago. It was a little sentimental for the first few hours, but, in the end it mostly went into the woodstove too! Org charts, congratulatory and thank you letters, professional certifications, performance reviews, monthly reports, expense reports, travel records, etc., all converted to heat. But, that's the subject for another thread........

Edited to add: Oh yeah, plaques went into the woodstove too! It just seems like yesterday management was telling me....... "No raises again this year, but here's another plaque for you and your team to show our appreciation for another record year!" Hee...hee.... If you can't pay 'em, plaque 'em!
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 01-07-2008, 11:35 AM   #71
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 514
ERD, I'm not sure you're being honest. You're ignoring inflation - a cardinal sin on this forum.

Take a reasonable salary for 2007, say, $63,000. Based on the tables you posted, in 2007, the individual would owe the following:

10% on the income between $0 and $15,650 ($1,560)
15% on the income between $15,650 and $63,000; ($7,102)

For a total tax bill of $8,662, or 13.7% of their income.

Assuming 3% inflation, $63,000 in 2007 is $30,089 in 1982. Their tax obligation would be

12% from $3,400 to $20,200 ($2,016)
25% from $20,200 to $30,089 ($2,472)

for a total tax bill of $4,488, or 14.9% of their income.

1.2%. That's the difference. Admittedly, it doesn't appear that income taxes are substantially higher today than they were 25 years ago. Indeed, it looks like they're 1.2% lower.

My perspective is as a Canadian. Income tax rates in Canada are much higher than the numbers you posted. In addition, there is provincial income tax on top of that. Then there's the provincial sales tax, and national sales tax, which combine to add another 13% onto everything we purchase. The national sales tax didn't exist in 1982, so that reduces the parents' cost by at least 5% (it was 7% up until a year ago).
__________________
kombat is offline   Reply With Quote
Old 01-07-2008, 11:38 AM   #72
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,281
re: healthcare

Quote:
Originally Posted by kombat View Post

True, but it's the current generation that is bearing that cost. That's my point. Boomers are done making income, and are thus also done (for the most part) paying taxes. Yet they're the ones consuming all these fancy, expensive new medical procedures.
kombat - would you like to pay my retiree health insurance? It's over $8500 per year. Please give me a name and address of someone in the current generation that I can send the bill to. That would be nice.

I also have not incurred anywhere near that in actual expenses, so I am paying someone else's way - but I'm OK with that, that is what insurance is all about.

Time for you to do some homework, or doesn't the 'current' generation find that necessary? Just about every complaint you have is unfounded. In fact, they are more like the opposite of what you claim.

No capital gains tax!!! Gee, I didn't file a schedule D that year, but looking at the forms, it appears to go right under 'income' so I'm pretty sure it would have been taxed at my marginal rate of 39%. Lucky me.

Maybe you can look that up and inform me if it is different.

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 01-07-2008, 11:44 AM   #73
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by ERD50 View Post
You got to walk? I had to pull the milk wagon into town, sell the milk, then come home and feed the cows. Slacker!

-ERD50

PS - this was before the invention of the wheel - milk wagons are a bummer to drag!
By any chance, did you trade the cow for some beans? Did the beans grow into a vine reaching to the clouds? Did you climb it? Was there a giant up there?
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 01-07-2008, 11:49 AM   #74
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by kombat View Post
My perspective is as a Canadian. Income tax rates in Canada are much higher than the numbers you posted. In addition, there is provincial income tax on top of that. Then there's the provincial sales tax, and national sales tax, which combine to add another 13% onto everything we purchase. The national sales tax didn't exist in 1982, so that reduces the parents' cost by at least 5% (it was 7% up until a year ago).
Are you being honest with us kombat? This crap can't be true! Do a search for the posts made by a Canadian named Zipper. He's been consistently telling us that everything in Canada is perfect in all regards with absolutely no flaws or room for improvement. Go read his last few dozen posts. What you're saying can't be true.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 01-07-2008, 11:51 AM   #75
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,107
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 01-07-2008, 11:53 AM   #76
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,281
Quote:
Originally Posted by kombat View Post
ERD, I'm not sure you're being honest. You're ignoring inflation - a cardinal sin on this forum.

Take a reasonable salary for 2007, say, $63,000.
That is incorrect, I did not ignore inflation. I was looking at inflating UP from my 1982 income, you are looking at inflating DOWN form 2007 income of 63,000. Not right or wrong, just a different angle, which will be affected by the 'progressiveness' of the tax system.- and I did not publish the whole table (as I pointed out)

There were 2% increases about every few $K, so $30,089 would have been taxed @ 12, 14, 16, 19, 22, 25, 29, and 33%.

Table says $5632 for $30,089 - 18.7% of income back in 1982. Versus your 13.7% of income today (assuming 3% inflation is a good number).

18.7% or 13.7% - which would you prefer?

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 01-07-2008, 11:55 AM   #77
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,281
Quote:
Originally Posted by youbet View Post
By any chance, did you trade the cow for some beans? Did the beans grow into a vine reaching to the clouds? Did you climb it? Was there a giant up there?
Dammit! My cover's been blown! And you figured the 'zipper' connection too!

So much for anonymity on the internets!

-ERD50 (or somebody)
__________________
ERD50 is offline   Reply With Quote
Old 01-07-2008, 11:58 AM   #78
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 514
Quote:
Originally Posted by ERD50 View Post
re: healthcare

kombat - would you like to pay my retiree health insurance? It's over $8500 per year.
You cut out the other part of my comment, but I conceded that this is more of an issue in a country like Canada, with socialized healthcare, than it is in an "every man for himself" country like the US. Being Canadian, I can only relate my own personal experiences and roadblocks in this particular country.

Quote:
Originally Posted by ERD50 View Post
Time for you to do some homework, or doesn't the 'current' generation find that necessary? Just about every complaint you have is unfounded. In fact, they are more like the opposite of what you claim.
Well, so far the total stands at "1." You pulled out some tax tables from 1982 and demonstrated that federal income taxes are 1.2% lower now than they were then. You ignored state income taxes, states sales taxes, property taxes, capital gains taxes, or social security premiums (no one has yet told me if this is actually itemized on your tax bill as it is in Canada, or if it is "invisibly" rolled into your general taxes).

Quote:
Originally Posted by ERD50 View Post
No capital gains tax!!! Gee, I didn't file a schedule D that year, but looking at the forms, it appears to go right under 'income' so I'm pretty sure it would have been taxed at my marginal rate of 39%. Lucky me.
I'm not sure that's accurate. In Canada, we fill out a separate schedule that determines what percentage of the capital gains we must pay taxes on (currently 50% of the gains are taxed as regular income). After performing that computation, the amount that is considered "taxable income" is copied over into the general return and added to our other income. So the entire gain is not taxed as income, only a portion of it. But it is just that portion that shows up in the return, unless you dig out the specific schedule that was used to produce that number. I'm not sure if this would be the case with US capital gains taxes in 1982, but it's possible you're glossing over some important details here.
__________________
kombat is offline   Reply With Quote
Old 01-07-2008, 12:03 PM   #79
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,887
Quote:
Originally Posted by kombat View Post
You ignored state income taxes, states sales taxes, property taxes, capital gains taxes, or social security premiums (no one has yet told me if this is actually itemized on your tax bill as it is in Canada, or if it is "invisibly" rolled into your general taxes).
State income tax, federal income tax, social security payments, and Medicare payments are all itemized on your paycheck stub and deducted from your paycheck (for most jobs) in the U.S.

We don't get a tax bill, but are required to compute our taxes ourselves and send in the form either with a check for additional taxes, or claiming a refund.

Helpfully yours,

W2R
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 01-07-2008, 12:04 PM   #80
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,494
Quote:
Originally Posted by REWahoo View Post
Hey, ERD. Don't forget to tell them we had to walk to school barefoot...in the snow...uphill both ways.
Certainly those conditions are tough enough by themselves, but throw in the need to battle the scorpions, chiggers, and rattlesnakes every step of the way and you've got a real unpleasant experience
__________________

__________________
JPatrick is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Boomers! Boomers! What is going to happen to property values? chinaco FIRE and Money 19 06-26-2007 04:14 AM
Any of you affluent women care to comment on this? mickeyd FIRE and Money 4 11-12-2006 02:51 PM
'Affluent' Investors REWahoo FIRE and Money 18 08-18-2006 01:38 PM
The 'Semi-Affluent' Investor intercst FIRE and Money 8 08-08-2005 07:59 AM
Bernstein - Boomers among us will have SS.... Cut-Throat Other topics 14 11-27-2004 12:53 PM

 

 
All times are GMT -6. The time now is 09:10 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.