Poll: Future Tax Rates Will Be Higher

[samclem]

Quote:

Originally Posted by Gone4Good And yet income taxes account for less than half of federal revenue.

Income taxes account for 58% of federal revenue. Individual income taxes account for 47% of federal revenue. And payroll taxes paid jointly by employers and employees account for 38% of federal revenues (2015 numbers). Now, the discussion of that last component is interesting, particularly if we examine the relative benefit gained by those at various income levels from the taxes they (and their employers) pay, and the resultant inducements to favor increases in those programs. The subject of the thread is "will taxes go higher", and the support for increases in payroll taxes, especially if they will be paid by someone else, may be significant. But, we can escape those by retiring!

[Shanky]

National VAT. Only way to extract more tax from Roth IRA's

[Gone4Good]

Quote:

Originally Posted by Shanky National VAT. Only way to extract more tax from Roth IRA's

VAT is one one way. A carbon tax is another. A wealth tax is a third. Taxing Roth withdrawals directly is a fourth. Including Roth withdrawals as "income" for determining things like taxes on SS is a fifth. Using asset based means testing for government benefits is a sixth.

Lots of ways to skin a Roth.

[Shanky]

Quote:

Originally Posted by Gone4Good VAT is one one way. A carbon tax is another. A wealth tax is a third. Taxing Roth withdrawals directly is a fourth. Including Roth withdrawals as "income" for determining things like taxes on SS is a fifth. Using asset based means testing for government benefits is a sixth. Lots of ways to skin a Roth.

Agreed. My cynicism was too narrow.

[2017ish]

Quote:

Originally Posted by Gone4Good VAT is one one way. A carbon tax is another. A wealth tax is a third. Taxing Roth withdrawals directly is a fourth. Including Roth withdrawals as "income" for determining things like taxes on SS is a fifth. Using asset based means testing for government benefits is a sixth. Lots of ways to skin a Roth.

But, but, but.... Our elected representatives promised.

https://www.youtube.com/watch?v=zOXtWxhlsUg

[RetireAge50]

One way to not get hit with future tax changes on wealth, Roth's, etc. is to spend the money (now).

[marko]

Quote:

Originally Posted by Car-Guy 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.

What's next is a whole new industry of hiding wealth for the LBYM crowd as I see a move toward your NW, not just your income being means tested and taxed. $1.5MM in investments? No SS or Medicare for you, just higher taxes based on your NW!

Of course, new and clever ways to straight-arm the taxman will surface as well.

I've often mentioned on this forum how the wealthy have resources to remain unaffected.

[Fedup]

Mine will be lower so far, but I think eventually it might tick up. But certainly my husband and I paid the highest tax back in 2000 time frame.

[HFWR]

I plan to avoid future tax surprises by actually being broke...

[traineeinvestor]

For the two places which are most relevant to me, it's more likely that taxes will fall than rise in the near future. Both Hong Kong and New Zealand are running surpluses at the moment - for Hong Kong, I'm hoping for another quarter of rates concessions (basically a reduction in property taxes) and for New Zealand a reduction in income tax rates as an election bribe ahead of next year's election.

For the less significant ones I'm expecting increases that may affect me in the UK and US and no net change in China and Australia.

All that being said, my budget included an allowance for general increases in living costs which includes taxation.

[EastWest Gal]

Just curious, since Hong Kong is now part of P.R.C., how does a city generate a tax surplus that doesn't just go into the national government's coffers? How does a city run a tax surplus?


Sent from my iPhone using Early Retirement Forum

[Car-Guy]

Quote:

Originally Posted by marko What's next is a whole new industry of hiding wealth for the LBYM crowd as I see a move toward your NW, not just your income being means tested and taxed. $1.5MM in investments? No SS or Medicare for you, just higher taxes based on your NW!

I fully agree with that, however, I do think that the means testing NW target will "start out" higher than $1.5m and then be phased or graduated down.

Quote:

Originally Posted by marko Of course, new and clever ways to straight-arm the taxman will surface as well.

And they will closed those "ways" as fast as we can find them.

Quote:

Originally Posted by marko I've often mentioned on this forum how the wealthy have resources to remain unaffected.

Maybe, but I think you might need significantly more than most on this forum (based on some recent polls I've seen) to really remain unaffected.

[Car-Guy]

Quote:

Originally Posted by 2017ish But, but, but.... Our elected representatives promised.

This should be posted in the "it's funny joke Thursday" thread. Sad but so true.

[Koolau]

As long as votes can still be bought with "free" stuff, taxes on those still willing to w*rk must go up. I DO look for a VAT type tax with the "promise" that income tax will be lowered. Of course, once the new tax is added, there's nothing to hold office-holders to their empty promises. If this sounds "political", it's not. It just cynical which is what I am when it comes to our current (and future) situation. Of course, I could be wrong. I was once, so YMMV.

[kcowan]

Quote:

Originally Posted by marko Of course, new and clever ways to straight-arm the taxman will surface as well. I've often mentioned on this forum how the wealthy have resources to remain unaffected.

Quote:

Originally Posted by RetireAge50 One way to not get hit with future tax changes on wealth, Roth's, etc. is to spend the money (now).

Quote:

Originally Posted by Shanky National VAT. Only way to extract more tax from Roth IRA's

Quote:

Originally Posted by Koolau ...the new tax is added, there's nothing to hold office-holders to their empty promises. If this sounds "political", it's not. It just cynical which is what I am when it comes to our current (and future) situation. Of course, I could be wrong. I was once, so YMMV.

Take a lesson from our neighbors to the south. They buy houses and condos. They do not trust banks. They rent them out and do not declare the income. They buy stuff for cash and avoid the VAT.

It is tax anarchy because the government is not trusted. The real estate industry does not report sales to the government except to capture capital gains. So if you buy and hold, you are fine.

We can learn a lot from the Mexicans!

(Did I mention that I own property there? 95% of the owners do not declare rental income.)

[Fedup]

Quote:

Originally Posted by kcowan Take a lesson from our neighbors to the south. They buy houses and condos. They do not trust banks. They rent them out and do not declare the income. They buy stuff for cash and avoid the VAT. It is tax anarchy because the government is not trusted. The real estate industry does not report sales to the government except to capture capital gains. So if you buy and hold, you are fine. We can learn a lot from the Mexicans! (Did I mention that I own property there? 95% of the owners do not declare rental income.)

Is that legal or illegal to do that?

[kcowan]

Quote:

Originally Posted by Fedup Is that legal or illegal to do that?

As I said, it is tax anarchy against a government that is not trusted.

(In case the word is not understood, anarchy is illegal protest.)

But maybe they are just more advanced than we are?

[Fedup]

Quote:

Originally Posted by kcowan As I said, it is tax anarchy against a government that is not trusted. (In case the word is not understood, anarchy is illegal protest.) But maybe they are just more advanced than we are?

I hope that was not a serious comment. Wasn't Mexico described as a failed state a few years ago? I'm not sure I want USA to be that advanced. Thanks but no thanks.

[Closet_Gamer]

To OP's original topic...

I think taxes must go up but I don't believe we'll see much change in rates.

I think (hope) that the "close tax preferences in exchange for lower rates" meme will be replaced by a decision to close tax preferences while maintaining the same rates. The easiest way to do that is just to slap a hard deduction cap (e.g., $20K) and a hard rate (e.g. 28%) that can be deducted. It ducks a lot of the politics because if you want to use your deduction for charity, mine for mortgage interest and a third person for college payments, knock yourself out but there is a hard limit. Blow away the corporate welfare along the way. For good measure, sweep the state income tax deduction into that cap as well and level that playing field.

In some ways these changes will be difficult because the really engaged people will fight hard...but to the broad un-engaged masses who have to hang in for longer than a tweet the avg citizen will just hear "no changes in tax rates and we balance the budget". Perhaps leavened with a populist, updated version of the AMT that whaps anyone making >$5-10M/yr on the knuckles.

Other taxes/fees will likely go up and probably should. In particular, our rotting infrastructure will need to be upgraded/replaced. Buckle up for gas taxes, etc.

[Koolau]

Quote:

Originally Posted by krotoole In some ways these changes will be difficult because the really engaged people will fight hard...

Please, do keep in mind that it is our gummint that is responsible for all the "loop-holes" which most of us use to one extent or another. Gummint picks winners and losers through tax policy. In the "vacuum" of reality (not politics) such policy is neither right nor wrong. We can argue all day about what should be or shouldn't be "done away with" in the way of loop holes. True, "fat cats" (of which I could be considered one by anyone making/taking LESS from pension/SS/etc.) fight for their particular tax "haven", but the folks we elect make the final decision. We might all keep that in mind as we think about coming elections.

This is not meant to be political nor is it a sermon, just sayin'... Of course, YMMV.