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View Poll Results: Will future tax rates be higher?
Yes - - future tax rates will be higher. 99 74.44%
No - - future tax rates will stay the same or will be lower 23 17.29%
Other - - it's complicated and I'll post about it below 11 8.27%
Voters: 133. You may not vote on this poll

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Old 05-14-2016, 07:04 PM   #41
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May be, but the net effect is the same for planning.
Well, not necessarily. For example, paying taxes now for a trad Ira > Roth conversion in anticipation of higher income tax rates in the future may not help much if other taxing means such as Federal VAT get implemented. The promise not to tax Roth's is kept but... I apologize, that's a tangent.
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Old 05-14-2016, 07:18 PM   #42
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Well, not necessarily. For example, paying taxes now for a trad Ira > Roth conversion in anticipation of higher income tax rates in the future may not help much if other taxing means such as Federal VAT get implemented. The promise not to tax Roth's is kept but... I apologize, that's a tangent.
I was making a broader point, all taxes/fees overall, not just Fed income taxes or the merits of Roth conversions.
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Poll: Future Tax Rates Will Be Higher
Old 05-14-2016, 07:38 PM   #43
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Poll: Future Tax Rates Will Be Higher

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Originally Posted by Major Tom View Post
Agreed. Something has to give. Collectively, we like nice stuff, and that has to be paid for, sooner or later (usually later).

Yep. A hole generation of people who like nice stuff and like to not work for it ... Why work when they can get it for free...

The under-savings of an entire generation ( now retiring) will have to be provided for somehow.

With the average 401K balance of 55-65 year olds at just $120K it would surprise me if we don't see the Medicare tax go up as a starter.

We already saw the surcharge as ACA was implemented.

Where I think the debate will be is not if, but when we expect to see increases and on what

Examples: Long term cap gains could go back to 20% or higher. In the 1950s I think they were more than 35%. National sales tax. Higher marginal tax bracket. A surcharge tax on retirement accounts...many things can change.

We also will see more loopholes closed - such as file and suspend. We could see changes to means testing for SS, Medicare, and even ACA .... Many many ways to fund the guvmint ..

Gives good credence to spreading your money in pre and post tax accounts, taking some gains from time to time, doing Roth conversions etc etc etc..
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Old 05-14-2016, 08:08 PM   #44
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I was making a broader point, all taxes/fees overall, not just Fed income taxes or the merits of Roth conversions.
Of course you are right. When taking into account the universal imponderables related to taxation I stand corrected. Thank you
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Old 05-14-2016, 08:13 PM   #45
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We could see changes to means testing for SS, Medicare, and even ACA .... Many many ways to fund the guvmint ..
Yes it could get much worse. SS benefits and Medicare premimuns are already means tested as you probably know. Depending on how much earned income you have, up to 85% of your SS benefits are taxed. Have to much total income and your Medicare monthly premiums can double, triple or more. What's next.
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Old 05-15-2016, 12:46 AM   #46
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Why would Federal income tax levels increase? Don't we vote for congressmen/women, and they pass the tax laws? In the political climate that has developed over the past 20 years, who is going to get elected if they admit that they would vote for higher taxes, or re-elected if they actually do vote for higher taxes? At what point will the attitude change and the US electorate start voting for representatives who are going to increase tax rates?

I see the need for higher taxes in order to pay our bills. I just don't see a path to higher taxes that is voluntary and doesn't involve some sort of crisis with the National debt.
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Old 05-15-2016, 08:37 AM   #47
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Why would Federal income tax levels increase? Don't we vote for congressmen/women, and they pass the tax laws? In the political climate that has developed over the past 20 years, who is going to get elected if they admit that they would vote for higher taxes, or re-elected if they actually do vote for higher taxes?
How can you tell when a politician is lying? No need to answer that....
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Old 05-15-2016, 09:16 AM   #48
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The largest single forcing functions for increased tax rates in the history of income tax in the US are the World Wars. I don't foresee that type of expenditure being required in the future from social programs, etc., and certainly not in a step-wise manner.

Thus, I expect my effective tax rate (consistent with income... if my income spikes, obviously that might change) will remain in the neighborhood of 15% +/- 2% for the remainder of my life.

I don't see the same certainty in massive personal income tax hikes coming. I think it is likely that the government seeks ways to obtain more in corporate taxation.

Interestingly, we had fairly low federal income tax rates prior to WWII, and it seems that once we developed the military-industrial complex and the expenditures that go with it, we've just kind of "gotten used to it", much like gasoline prices relative to crude pricing. We're paying way more now considering the price of oil than we were last time it was this low. In 2002 (last time oil was $43/bbl) we paid about $1.55 per gallon of regular in CA. Today? Average is $2.78. Inflation adjusted gas should be closer to $2.00, but we're used to paying way more, so they can price it accordingly!

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Old 05-15-2016, 09:26 AM   #49
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There are often threads in which an OP assumes higher taxes in the future, followed by several others posting 'future taxes are unknowable' - as if it's foolish to plan for any increase. While the specifics are indeed unknowable, assuming taxes will be higher over the next 30 years seems like almost a given to me.

Does anyone think future taxes on a given income will go lower?

Note I mean higher net taxes, not how/where the increases will come. Higher rates, lower thresholds, reduced benefits/COLAs, new fees/taxes, sales taxes, Fed/state/county/city - there are endless sources/"disguises."
Even if we know with absolute certainty that the statement "taxes will go up" is true, planning for that fact is near impossible without also knowing many other details:

Tax rates go up but my income goes down because social security benefits were cut

Taxes go up because they introduced a carbon tax that partially offset the income tax

Taxes go up because payroll taxes were lifted to fund SS & Medicare but income tax rates stay the same or decline

Taxes go up because capital gains & dividend taxes are lifted

Taxes go up because of a new a wealth tax

Taxes go up because rates have become more progressive with increases at the top and decreases at the bottom

Taxes go up because tax advantaged accounts are now taxed

Taxes go up because itemized deductions are severely reduced while rates are lowered as a partial offset

Taxes go up because of a new VAT tax

Taxes go up because all income tax brackets are lifted

-----

Nearly every item on this list has the backing of some political faction, with the possible exception of the very last one. And yet it's the last item that most folks seem to assume when planning for future tax increases.
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Old 05-15-2016, 10:58 AM   #50
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I would think something has to give...and there are no easy/obvious choices.

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Old 05-15-2016, 11:13 AM   #51
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I would think something has to give...and there are no easy/obvious choices.
That chart is a little out of date so I ran one with numbers up until 2015 (same source)

Also not sure why the original chart starts in 1950 (actually, I am) but if you start it in 1980 the trend looks much different.
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Old 05-15-2016, 11:34 AM   #52
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There are certain costs that are bound to go up:
- insurance for fire, flood, hurricanes, earthquakes
- cost of education at all levels
- cost of health maintenance
- cost of policing
- cost of maintaining infrastructure
- ...
Whether these are paid by increased fees or taxes is moot. It is our bottom line that counts. So unless there is massive economic growth, higher taxes/fees are inevitable.
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Old 05-15-2016, 11:46 AM   #53
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... Does anyone think future taxes on a given income will go lower?

At the very least I assume taxes will remain the same, though that seems highly unlikely IMO. Then it only remains how much higher taxes to plan for, that's the only unknowable IMO...
+1

If we are fortunate, taxes will stay the same. I do not see how it can go lower, at least for people like myself and posters here.
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Old 05-15-2016, 12:28 PM   #54
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Why would Federal income tax levels increase? Don't we vote for congressmen/women, and they pass the tax laws?
Approx 45% of US citizens pay no net federal income taxes (2015 numbers). These people have no inherent personal interest in reducing federal tax rates, and to the degree they are recipients of payments from the federal government (ACA subsidies, block-granted assistance programs, etc) they may be incentivized to support higher taxes (if they won't be paying them and possibly receiving higher payouts as a result of these collections).

The top 20% of earners pay 85% of the personal income taxes collected in the US (they earn about 50% of the money). So, and this isn't about politics, it's just numbers, it's possible we increasingly have an electorate that may favor higher taxes because they aren't the ones paying them, or they pay relatively little, and may receive a personal benefit if higher federal outlays result. Kinda the opposite of what you've laid out.

Yes, the above treatment does not cover state income taxes, payroll taxes, excise taxes, dog licenses, etc.
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Old 05-15-2016, 01:14 PM   #55
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For all the people who insist taxes will go up because they always have--

https://research.stlouisfed.org/fred...es/FYFRGDA188S

The overall percent of GDP taken by the Feds in taxes has been pretty flat overall since WWII.

Therefore, I'm not expecting dramatic changes either way.
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Old 05-15-2016, 01:28 PM   #56
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But the millennial generation is even bigger than the BB gen: Millennials overtake Baby Boomers as America’s largest generation | Pew Research Center

Won't that be helpful, eventually?

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Y
-- Demographics: End of the baby boom = relatively fewer tax payers and relatively more recipients of government services.
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Old 05-15-2016, 01:58 PM   #57
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But the millennial generation is even bigger than the BB gen: Millennials overtake Baby Boomers as America’s largest generation | Pew Research Center

Won't that be helpful, eventually?
The situation keeps getting worse, only more slowly that before. Still not great.

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Old 05-15-2016, 02:42 PM   #58
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Yes, the above treatment does not cover state income taxes, payroll taxes, excise taxes, dog licenses, etc.
Doesn't this admission completely invalidate everything written before it?

I assume the "dog licenses" reference was thrown in to indicated the unimportance of everything but individual income taxes. And yet income taxes account for less than half of federal revenue.
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Old 05-15-2016, 02:49 PM   #59
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The US seems to be following EUROPE when it comes to certain things, like healthcare and other laws. I just don't see how the US can continue to follow this model without also increasing taxes.


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Old 05-15-2016, 04:40 PM   #60
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After carefully throwing my chicken bones, they're saying...saying...."All Circuits Are Busy. Please Try Again Later." Wait! I'm getting somethihng now: "Have You Considered Now's The Time to Go Back And Attend Our Advanced Chicken Bones Throwing Course?"

Damn, I hate these advertisements!
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