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Old 08-07-2008, 10:06 AM   #21
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People who FIRE tend to be in high tax brackets while working, and low brackets afterwards, whereas people who work until they die tend to be in the middle brackets forever. If the government wanted to make sure FIREes "pay their share" of taxes then they should shift the tax burden more from the middle brackets to the high brackets. As things are, the guv is incentivizing ER, just like it incentivizes homeownership. You can't fault people for responsibly engaging in the behavior that is incentivized.
Hahaha. The government is "incentivizing the rich to ER" by letting them keep some of their earnings. That's so gracious of the government. Just like government incentivizes cell phones by NOT slapping huge taxes on its use. Too funny.


Edit: Not applying a punitive tax <> incentivizing behavior
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Old 08-07-2008, 10:10 AM   #22
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Am I allowed to say "bite me" on this board?
We had a fired ex moderator who said a good bit worse than that when he got upset...
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Old 08-07-2008, 10:33 AM   #23
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This was our response to that piece in July, published by Motley Fool: The Experience Dividend

Boomers will continue to contribute to society in one way or another even in retirement, and besides, not everyone will retire full time.

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Old 08-07-2008, 10:42 AM   #24
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" Stein says. "I mean, why should very rich people get Social Security?
Duh! Maybe because they pay into it.
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Old 08-07-2008, 11:01 AM   #25
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Duh! Maybe because they pay into it.
You got it! What part of "trust" doesn't Stein get?
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Old 08-07-2008, 11:21 AM   #26
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Hmmmm...unpatriotic....what do you call it when your country allows your job to be outsourced to India....and you decide to retire at age 51 instead of starting over?

(but I'm still very HAPPY!!!)

How about a good government.....

They didn't 'allow' you to get the job anyhow... so why should they 'protect' it
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Old 08-07-2008, 11:28 AM   #27
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Hahaha. The government is "incentivizing the rich to ER" by letting them keep some of their earnings. That's so gracious of the government. Just like government incentivizes cell phones by NOT slapping huge taxes on its use. Too funny.


Edit: Not applying a punitive tax <> incentivizing behavior
The governemnt incentivizes breathing by not taxing air. I am so happy about my generous governemnt.

BTW, I am reading an excellent book named Petrostate, about the rise of Vladimir Putin and the return of tight state control in Russia. I think it shows what an extreme this this idea that the state owns, and the state gives (or allows one to keep) can reach.

All I can say is I wish America existed somewhere so I could emigrate as we swing in that direction under the kind leadership of our charasmatic president to be.

Ha
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Old 08-07-2008, 08:42 PM   #28
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How about telling employers to start hiring or stop getting rid of older workers?
Exactly! A friend of mine, also age 58, was just "laid off"! Where are these jobs where we can make a contribution?I would have worked longer but no one would hire me full time. No one! The only part time jobs I could probably get are in retail at $8/hr. I don't think so! I don't need a job, but I wanted to continue contributing in my own field of expertise. So I just free lance whenever I feel like it. Unpatriotic? What hogwash, to put it mildly.
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Old 08-07-2008, 10:18 PM   #29
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Just a reminder. When the good professor first posted his crap findings, we exchanged emails. I politely invited him to participate in the forum discussion, he said he would do so. I reminded him a couple weeks latter and he never bother to show up so...

I hope he enjoys his taxpayer funded work, but he is on my ignore list.
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Old 08-08-2008, 12:41 PM   #30
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Hahaha. The government is "incentivizing the rich to ER" by letting them keep some of their earnings. That's so gracious of the government. Just like government incentivizes cell phones by NOT slapping huge taxes on its use. Too funny.
Perhaps, but I think I understand what was meant.

Let me phrase it a different way: Tax policy -- between graduated income taxes and payroll taxes on the employed -- increasingly reduces the "incremental payback for working" as you accumulate more assets and reach higher incomes.

And when you add to that other costs -- commuting costs, possibly wardrobe expenses and more eating out, and that some couples may be able to FIRE with only one car instead of two -- it could well be the case for every dollar you work, you're only coming out a quarter ahead -- if that.

I wouldn't phrase this as "the government LETTING FIREs keep more," but it IS a tax policy structured to make continuing to work an exercise in diminishing returns. And when the returns diminish to the point where it's just not worth it any more, it's FIRE time. With a different tax structure that might not be the case. But the more you graduate the income tax to put higher incomes into higher brackets, the more you fund government with payroll taxes and the more government means-tests benefits, the less and less it pays to stay on the hamster wheel.
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Old 08-08-2008, 01:35 PM   #31
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Let me phrase it a different way: Tax policy -- between graduated income taxes and payroll taxes on the employed -- increasingly reduces the "incremental payback for working" as you accumulate more assets and reach higher incomes.
This is certainly true. Almost half of every additional dollar I earn at my job goes to taxes (of various kinds). I have essentially no incentive to remain in the workforce once I become eligible for lifetime medical benefits when I turn 50 (1 1/2 years and counting). This will be more true if taxes are raised by a future president/congress. Because of the incentive not to work, when I early retire, the government will get about 1/10 of what it gets from me today. The government isn't very smart.

At a normal business, non-exempt employees are frequently paid at a higher rate for working overtime. An employee making $20/hr might be offered $30/hr to work beyond a 40-hour week, and $40/hr to work holidays. This positive incentive encourages employees to put in additional work, and it increases overall productivity. Businesses and employees are smart.

But the government has a different approach. The government's tax policy essentially gives employees less money when they work overtime. To complete the analogy, the government offers the above employee $15/hr to work beyond a 40-hour week and $10/hr to work holidays. This negative incentive does not encourage employees to put in additional work. It does not encourage productivity. The government isn't very smart.
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Old 08-08-2008, 01:41 PM   #32
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Yep, between taxes and paying someone to cook my food, clean my house, do my yard work and fix/maintain my house and cars because I was too busy working to do any of it myself, the majority of the money I made disappeared.

Currently there are three of us living on about 40% of what I spent when I was working, at about the same or better quality of life. Of course I'm still doing a lot of work. But I can do a lot of it in a pair of boxer shorts and drink beer on the job.
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Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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Old 08-08-2008, 02:10 PM   #33
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Yep, between taxes and paying someone to cook my food, clean my house, do my yard work and fix/maintain my house and cars because I was too busy working to do any of it myself, the majority of the money I made disappeared.
I know what you are saying. But whatever happened to the economic principle of comparative advantage?

I think excessive taxes, regulation, insurance requirements etc. have turned this on its ear.

Ha
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Old 08-08-2008, 02:25 PM   #34
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Indeed. When I was working my hourly wage was very high and my free time slim. There was great benefit in trading some of that plentiful money for others skills at a much lower cost to me than if I did it myself.

But now my time is plentifu and value of time is low.

Here's another look at it that fits well with your observation. I probably wouldnt mind doing some light handyman work around the neighborhood. Everyones house needs things done, they all work full time jobs, and all the homes were built by the same builder and I know what he screwed up.

But I'd have to get a contractors license and a business license, pay fees, and get liability insurance out the wazoo. It'd cost me a bunch of money up front and be a pain in the butt. I'd have to put in a fair number of hours for it to be profitable. No thanks.

A hundred years ago, even fifty, I could have put out a shingle and dropped some notes in peoples mailboxes and been in business doing what I wanted to do when I wanted to do it, making good on the comparative advantage deal.
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Old 08-08-2008, 08:53 PM   #35
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But I'd have to get a contractors license and a business license, pay fees, and get liability insurance out the wazoo. It'd cost me a bunch of money up front and be a pain in the butt. I'd have to put in a fair number of hours for it to be profitable. No thanks.
Or you could just do neighbor favors for baked goods. It works out to about the same result and saves you a lot of trips to the bakery...
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Old 08-08-2008, 11:27 PM   #36
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Or you could just do neighbor favors for baked goods. It works out to about the same result and saves you a lot of trips to the bakery...
Indeed, this kind of easygoing exchange, giving someone my time and they give me something valuable back, is really a big benefit of being ER. When I was working I always felt like I didn't have enough time to give any away, so I missed out on lots of these pleasant exchanges. For instance I am helping a relative with some construction work and they gave me some tools and meals.

I suppose in a completely legalistic sense, this has elements of barter and maybe even should be reported to the IRS as income, but in practice not so much. If the IRS were to figure out how to capture tax on these kinds of barterlike exchanges, they would definitely discourage ER.
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Old 08-08-2008, 11:44 PM   #37
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If the IRS were to figure out how to capture tax on these kinds of barterlike exchanges, they would definitely discourage ER.
Technically, you owe the IRS 25% of any baked goods you receive. The most delicious 25%.
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Old 08-09-2008, 12:24 AM   #38
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I am selfish and greedy, Its the American way

So how does that make me unpatriotic

Ben Stein can kiss it lick it and love it
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Old 08-09-2008, 01:06 AM   #39
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I'm having trouble seeing why it's selfish to be FIREd. The FIREd person has saved and invested. They have in many cases earned a pension through decades of service, rather than depend upon the government for support, paying taxes all the while. They continue to pay taxes as they collect pensions and/or draw from their nest eggs. They spend that money, stimulating the economy. Many use some of their free time to serve their fellow humans in some capacity through volunteer work. I forgot to mention that their retirement opens opportunities for younger workers. Still looking for the selfish part!
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Old 08-09-2008, 03:45 AM   #40
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Technically, you owe the IRS 25% of any baked goods you receive. The most delicious 25%.

Let's see: SO and I split $40.00 and access to the complete Garbo collection for five days of cat sitting. Would the IRS like its 30% of the scooped poop in paper or plastic? That would be 9% to the State of Calif. by overnight mail. I suppose they want to be alone with their proceeds.
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