Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 03-02-2009, 11:22 AM   #181
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,294
Quote:
Originally Posted by Independent View Post
I suppose we'd disagree somewhat on where to draw the "moderate" line.
No. But only because I don't know where I would draw the line, so I can't agree or disagree.

Really, because the tax law is complex, I have almost no idea what the marginal rates really represent. I can't say if they should be more or less progressive than current. Even those tax tables from the IRS are of questionable value, because they are based on AGI, which is already a finagled number.

But I'll attempt a very, very lose answer. OK two parts:

1) I don't think we should ever talk about how much we should or should not "take", until we have had an honest discussion of how much we *need* to collect. We should never decide that we should take something, just because it is there to be taken. Far too many of these discussions go something like "well, they are rich, they can afford it!", and I think that is bogus. I might as well be able to grab a kid off the street and say "you're not doing anything, you are young and full of energy, cut my grass for me because you can "afford it", time and energy-wise". But I have no right to his time and energy. I also don't feel I have a "right" to someone else's money. And I know some people with far more money than I have - and they earned it.

Actually, since my taxes are probably going to support that kid in some way (schools, roads, etc), and he may not be paying taxes, I probably have a very small right to his time and energy, but I'm not going to ask for it anyhow.


2) Just on a totally gut-level, emotional response level, I'll throw out two numbers. Marginal tax rates should max out at 33%, definitely no more than 50% (and only if *needed*). My thinking is that at 50%, it just really gets to someone that more of their money goes to taxes than what they get to keep. It is an emotional goal-post, I think. 50% is a big fraction - 1/2. The next big piece is 1/3. So I see 1/3 (33%) as another goal post, as it opens the door to reaching 1/2. Someone might say - "If they take much more, I'll be giving more than I get". So, those are just a couple points that stick in my mind. But, *need* comes first.

-ERD50
__________________

__________________
ERD50 is online now   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 03-02-2009, 11:30 AM   #182
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
Tax policy shouldn't be punitive, unless you're Al Capone...

I'd like the idea of a moderately-progressive flat tax, as much for simplification as anything. Of course, we can and do argue ad nauseum about what governement's role should be. I lean to the "less" side, but in my mind, what trumps that is keeping the budget fairly close to balanced. So, if the majority decides we need lots of big gumment programs, then taxes should be set so that revenues cover expenses. What's the old saying about the best way to get rid of bad laws is to vigorously enforce them...
__________________

__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 03-02-2009, 11:35 AM   #183
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by armor99 View Post
Ah yes..... back to the "birth lottery" argument again. The idea that says that because you were born with certain abilities that others do not have, in this case intelligence, it means you have an "unfair" advantage over others. And it is only because of this "unfair" advantage that a certain percentage (like engineers, doctors, lawyers) can command the salaries that they do. And it is also the reason that these groups owe more to society (or people who were not born with above average intelligence). But why stop there? What of people who were born with above average looks, or athletic ability, or perhaps a business acumen? Not everyone is born with the same set of skills or abilities, but VERY few people (percentage wise that is) are born with virtually NO ability for anything at all.

I am an engineer by trade, and I hope that I get to keep my job or find other employment because I am somewhat good at it. Was I born with an aptitude for it?... sure... but it still took years of training and hard work to make it pay off into a profession for myself. Same with actors and sports stars. There was no "free ride" for me... and I think the same can be said of most successfull people. When people see those that are "rich" they are seeing the "after party" in a sense. What you do NOT see are the years of effort, sleepless nights studying or working, rejections endured, battles fought, etc.

Why is it that so many continually feel that they are entitled to more? I hear this sort of quasi reasoning all the time from lots of people. The logic being... "Well I work hard.... so I should get paid more"... Ok fine... why not choose a better paying profession? And then the excuses start.... I have no time... I am not smart enought.... the economy is bad right now... and on ... and on... and on some more. So after listening to all the reasons why they cannot achieve any more, I will always ask... "ok... so if you cannot do any more... then why do you think you deserve any more?" And it is usually followed by a deafening silence....
I bolded an "only", because I think it is instructive. I suppose there are people who think that the only reason others get ahead is good luck. Others seem to think the only reason is hard work. I think both extremes are unreasonable, high incomes can come from hard work, good luck, or some combinations of the two (I have trouble imagining anyone getting "very high" income without some measure of good luck).

Reading your post, I think you believe that nature somehow "evens things out". People who are unlucky in one way (say an IQ below 85) are almost always unusually lucky in some other way (incredible athletic talent). I don't. In fact, I think that there is a small positive correlation in the components of luck (e.g. low IQ people are somewhat more likely to go to poor schools). Even if there is no correlation at all, there will be very large differences in luck (especially since I include "luck" that happens when you are older - e.g. being in the right place when your company gets bought out.)

You might say that if everyone worked equally hard we'd all be within 10% of the median income. I think that if we all worked equally hard, we would still have a very wide variation in incomes, especially in the top half of the table.
__________________
Independent is offline   Reply With Quote
Old 03-02-2009, 12:00 PM   #184
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 1,012
i am reminded of the quote "Luck is what happens when preparation meets opportunity.”
__________________
jdw_fire is offline   Reply With Quote
Old 03-02-2009, 10:22 PM   #185
Full time employment: Posting here.
 
Join Date: Feb 2007
Posts: 595
Quote:
Originally Posted by Independent View Post
Reading your post, I think you believe that nature somehow "evens things out". People who are unlucky in one way (say an IQ below 85) are almost always unusually lucky in some other way (incredible athletic talent).
I re-read what I wrote, and guess I do not see how you might have thought the above. But just to clarify, I do not believe in any such correlation. What I did write, was that I believe it is a very rare individual that can be found, that has an aptitude or ability for nothing at all.

There are many wildly successful business owners in america that are not engineers, or lawyers, doctors, etc, and are considered to have only average intelligence. There are scores of plumbers, electricians, and other trades who have salaries that are much larger than mine. There are many players in the professional sports arena that might be considered of lower intelligence, yet they polished other abilities that they were given "at birth".

So all and all what I am attempting to say... and as clearly as I can... is that it is up to us in life how successful we wish to become. I do not believe that just because your intelligence is X or Y, it will determine your lot in life. Will it be easier for a true genius to become an engineer, than someone with a much more modest level of intelligence like myself.... I would think that is probably true. But equal opportunity, is never a guarantee of equal outcome.

Is there luck in life good and bad? Of course... and I just like everyone else have been the recipient of both. But those who believe that luck determines the outcome of their lives, are the same people that buy $100 worth of lottery tickets a month, and cannot figure out why they are not getting ahead. Much more of a "willful refusal to think", than an intelligence problem. Do not confuse stupidity (which cannot be fixed) with willful ignorance, which is up to the individual to fix...
__________________
armor99 is offline   Reply With Quote
Old 03-02-2009, 11:00 PM   #186
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,294
Quote:
Originally Posted by M Paquette View Post
May I commend this short story for your entertainment...

Harrison Bergeron

by Kurt Vonnegut (1961)
....
...
"Harrison Bergeron" by Kurt Vonnegut
Wow, amazing story, thank for bringing it to my attention. I've only read a little Vonnegut, and that style is right up my alley. Nothing flowery, just say what you mean. The creativity is in the story, the message.

Interesting that this thinking was this prevalent in 1961 to catch his attention. I thought it was much later than that, that we started with the "let's give Johnny a 'B' so he doesn't get discouraged, even though he did D- work".

I used to kid my DW, she was a Girl Scout troupe leader. Girl Scouts had "Try Its", I guess awards for "trying something". It didn't seem to matter if you succeeded or not. Trying is good, new experiences and so forth, but it really did seem to de-emphasize the " I DID it" part of it.

This triggers another memory. I helped put together some samples of a project they were going to do. I used reasonable care to make sure the angles were even and such. She told me "don't do it too neat, they'll feel bad when theirs don't turn out as nice"! That bugged me. Let's try to live up to a standard. What happened to "reach for the stars"?

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 03-02-2009, 11:07 PM   #187
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Quote:
Originally Posted by ERD50 View Post
Wow, amazing story, thank for bringing it to my attention. I've only read a little Vonnegut, and that style is right up my alley. Nothing flowery, just say what you mean. The creativity is in the story, the message.

Interesting that this thinking was this prevalent in 1961 to catch his attention. I thought it was much later than that, that we started with the "let's give Johnny a 'B' so he doesn't get discouraged, even though he did D- work".

I used to kid my DW, she was a Girl Scout troupe leader. Girl Scouts had "Try Its", I guess awards for "trying something". It didn't seem to matter if you succeeded or not. Trying is good, new experiences and so forth, but it really did seem to de-emphasize the " I DID it" part of it.

This triggers another memory. I helped put together some samples of a project they were going to do. I used reasonable care to make sure the angles were even and such. She told me "don't do it too neat, they'll feel bad when theirs don't turn out as nice"! That bugged me. Let's try to live up to a standard. What happened to "reach for the stars"?

-ERD50
I remember being a Boy Scout Jr. Scoutmaster when they implemented a new program. It seems after careful research they determined most Boy Scouts who didn't stay with their troop long term had dropped out at the rank of Second Class. So their solution was to create a week long program to get Tenderfoot scouts up to First Class rank. Now something that took six months took a week. I wonder if a second study was done to see what rank kids fall out now at and if that led to a "Get Eagle in a Month" program.
__________________
laurence is offline   Reply With Quote
Old 03-03-2009, 09:20 AM   #188
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by FIREdreamer View Post
Actually, in order to make my point (taxation based only on "good fortune") I had to assume that both Todd and Mike worked equally hard.

On a personal level, though, I think there is little doubt in my mind that Todd, a doctor who has gone through one of the tougher medical schools in the country and many years of residency has had to work much harder than Mike to get to where he is today. Good fortune helped, for sure, but we shouldn't discount Todd's own merits on the base that he was born under a lucky star.

I have had many jobs in my life. I have swept floors, I have emptied trash, I have operated heavy machinery on production lines, and I was a bank teller for a while too. Some of them had long/odd hours, some were utterly boring, some were physically demanding. But there is no doubt that my hardest "job" (in terms of workload and fatigue) was, by far, getting my PhD. No question about it.
I think part of your point about Todd is that the tax laws look at income in one-year slices, but "hard work" is measured over a lifetime. The public policy discussions on this do tend to obscure that fact.

Like you, I worked a lot of jobs. The one that really paid required a significant investment in time and energy in the early years. So if I try to split my later income into "hard work" and "good luck" buckets, I'd want to calculate a return on my initial investment and put that in the "hard work" bucket. In my case, even after I adjust for that, I have to honestly say my "good luck" portion is higher than the average person's.
__________________
Independent is offline   Reply With Quote
Old 03-03-2009, 09:54 AM   #189
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by armor99 View Post
I re-read what I wrote, and guess I do not see how you might have thought the above. But just to clarify, I do not believe in any such correlation. What I did write, was that I believe it is a very rare individual that can be found, that has an aptitude or ability for nothing at all.

There are many wildly successful business owners in america that are not engineers, or lawyers, doctors, etc, and are considered to have only average intelligence. There are scores of plumbers, electricians, and other trades who have salaries that are much larger than mine. There are many players in the professional sports arena that might be considered of lower intelligence, yet they polished other abilities that they were given "at birth".

So all and all what I am attempting to say... and as clearly as I can... is that it is up to us in life how successful we wish to become. I do not believe that just because your intelligence is X or Y, it will determine your lot in life. Will it be easier for a true genius to become an engineer, than someone with a much more modest level of intelligence like myself.... I would think that is probably true. But equal opportunity, is never a guarantee of equal outcome.

Is there luck in life good and bad? Of course... and I just like everyone else have been the recipient of both. But those who believe that luck determines the outcome of their lives, are the same people that buy $100 worth of lottery tickets a month, and cannot figure out why they are not getting ahead. Much more of a "willful refusal to think", than an intelligence problem. Do not confuse stupidity (which cannot be fixed) with willful ignorance, which is up to the individual to fix...
I'm glad that you clarified the correlation issue. I agree that almost everyone has some aptitudes for paid work. But I think that for some people, their aptitudes are only sufficient for low wage jobs. I think we disagree there.

I agree that "Equal opportunity is never a guarentee of equal outcome". But I am also saying that "Equal effort is never a guarantee of equal outcome". I could have worked very hard on my basketball skills in HS and college - every bit as hard as the typical future NBA player - and I wouldn't have earned a dime as a basketball player. Almost everyone has some abilities, but that does not mean we all have equivalent abilities.

Certainly, the IQ number that tests give us isn't the only measure of opportunity. There are many other innate abilities, and many things that happen after birth that we can't control. I look around, and it's obvious to me that they don't come close to evening out. The "birth lottery" is real. At the highest income levels, the "opportunity" lottery is even bigger.
__________________
Independent is offline   Reply With Quote
Old 03-03-2009, 10:21 AM   #190
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
I think the next step is to understand that if the "po-folks" are able to achieve the political clout it takes to get the tax code changed and benefit from a much more progressive tax structure (xfer of $ from the rich to them), then they've simply won in that competition. The now more highly taxed "rich-foks" will simply have shown they didn't try hard enough, or weren't smart enough or didn't do whatever it takes to win. They slacked off and didn't care enough to volunteer a lot of time or give a lot of money or both to their political cause. Their slackard actions will be just like those of "po-folks" who didn't have the ambition to go to engineering school, get a PHd, etc.

So ants, if the grasshoppers win out on this issue, look in the mirror and observe the cause!
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 03-03-2009, 10:32 AM   #191
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
Quote:
Originally Posted by Independent View Post
Like you, I worked a lot of jobs. The one that really paid required a significant investment in time and energy in the early years. So if I try to split my later income into "hard work" and "good luck" buckets, I'd want to calculate a return on my initial investment and put that in the "hard work" bucket. In my case, even after I adjust for that, I have to honestly say my "good luck" portion is higher than the average person's.
I would argue that a good income requires continued hard work (and good luck) well past beyond the initial investment. My wife and I have the same advanced degree and we both worked equally hard to get that degree. But since we graduated there is no doubt she has been a harder worker than me (Though I could say she was luckier than me, I would be lying to myself). And this is reflected in our paychecks. Her harder work, post graduation, has allowed up her to move up the corporate ladder and take on more responsibilities. This has come at a price: long hours (70-80 hours a week), 24/7 tethering to a blackberry, constant travel around the world (which means weeks away from home, disrupted sleep cycles leading to stress and fatigue, etc...) and much higher performance expectations. I, on the other hand, haven't moved up the corporate ladder much (by choice and not lack of opportunity), I basically work 9-5, I never travel, expectations are very manageable and I don't even have a blackberry. Her income is much higher than mine, and she deserves every cent of it IMO. And I have no doubt that, should she stop working hard, her "good luck" alone would not be enough for her to keep that job.
__________________
FIREd is offline   Reply With Quote
Old 03-04-2009, 08:54 AM   #192
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by FIREdreamer View Post
I would argue that a good income requires continued hard work (and good luck) well past beyond the initial investment. My wife and I have the same advanced degree and we both worked equally hard to get that degree. But since we graduated there is no doubt she has been a harder worker than me (Though I could say she was luckier than me, I would be lying to myself). And this is reflected in our paychecks. Her harder work, post graduation, has allowed up her to move up the corporate ladder and take on more responsibilities. This has come at a price: long hours (70-80 hours a week), 24/7 tethering to a blackberry, constant travel around the world (which means weeks away from home, disrupted sleep cycles leading to stress and fatigue, etc...) and much higher performance expectations. I, on the other hand, haven't moved up the corporate ladder much (by choice and not lack of opportunity), I basically work 9-5, I never travel, expectations are very manageable and I don't even have a blackberry. Her income is much higher than mine, and she deserves every cent of it IMO. And I have no doubt that, should she stop working hard, her "good luck" alone would not be enough for her to keep that job.
I'd certainly agree that hard work after you jump the first hurdle continues to have an impact. It appears that I was more like you than your wife. In my case, I was able to work 8-5, maybe take a little more responsibility home than the average worker, and still make 3x the income of "average" workers around me. Again, I'm not contending that "luck" is the sole determinate of financial outcomes. I'm disagreeing with the opinion that it doesn't count at all, or that it's so minimal it's easily overcome.
__________________
Independent is offline   Reply With Quote
Old 03-04-2009, 09:14 AM   #193
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by youbet View Post
I think the next step is to understand that if the "po-folks" are able to achieve the political clout it takes to get the tax code changed and benefit from a much more progressive tax structure (xfer of $ from the rich to them), then they've simply won in that competition. The now more highly taxed "rich-foks" will simply have shown they didn't try hard enough, or weren't smart enough or didn't do whatever it takes to win. They slacked off and didn't care enough to volunteer a lot of time or give a lot of money or both to their political cause. Their slackard actions will be just like those of "po-folks" who didn't have the ambition to go to engineering school, get a PHd, etc.

So ants, if the grasshoppers win out on this issue, look in the mirror and observe the cause!
Good points. And to take it a step further: due to the way the income curve looks in every country (not a bell, but heavily weighted to the left), there will always be far more lower-income people than wealthy people. If we put an artificial cap on the free speech tools used by upper income people (political donations--time is money, and they have more money than time), then we should realize that as a society we are deliberately and disproportionately increasing the power of lower income individuals--a group already favored in our democracy due to their larger numbers.

Get out there and act. You can bet those who want to take what is yours are not sitting idly by.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 03-04-2009, 09:19 AM   #194
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by ERD50 View Post
No. But only because I don't know where I would draw the line, so I can't agree or disagree.

Really, because the tax law is complex, I have almost no idea what the marginal rates really represent. I can't say if they should be more or less progressive than current. Even those tax tables from the IRS are of questionable value, because they are based on AGI, which is already a finagled number.

But I'll attempt a very, very lose answer. OK two parts:

1) I don't think we should ever talk about how much we should or should not "take", until we have had an honest discussion of how much we *need* to collect. We should never decide that we should take something, just because it is there to be taken. Far too many of these discussions go something like "well, they are rich, they can afford it!", and I think that is bogus. I might as well be able to grab a kid off the street and say "you're not doing anything, you are young and full of energy, cut my grass for me because you can "afford it", time and energy-wise". But I have no right to his time and energy. I also don't feel I have a "right" to someone else's money. And I know some people with far more money than I have - and they earned it.

Actually, since my taxes are probably going to support that kid in some way (schools, roads, etc), and he may not be paying taxes, I probably have a very small right to his time and energy, but I'm not going to ask for it anyhow.


2) Just on a totally gut-level, emotional response level, I'll throw out two numbers. Marginal tax rates should max out at 33%, definitely no more than 50% (and only if *needed*). My thinking is that at 50%, it just really gets to someone that more of their money goes to taxes than what they get to keep. It is an emotional goal-post, I think. 50% is a big fraction - 1/2. The next big piece is 1/3. So I see 1/3 (33%) as another goal post, as it opens the door to reaching 1/2. Someone might say - "If they take much more, I'll be giving more than I get". So, those are just a couple points that stick in my mind. But, *need* comes first.

-ERD50
In terms of total taxes, in my mind, the ideal doesn't put either spending or taxes first. When I buy anything else I'm making trade-offs. More money for a car mean less for a TV or whatever. I juggle the costs and benefits at the same time and make a decision. I think I've said before that if I could write the rules the voters would decide directly on how much gov't they want to buy (e.g. set the level of taxes/spending by annual referendum.) I think we'd quickly learn how much we can buy with additional dollars and come to some reasonable balance. But I certainly agree with you that we should never spend money just because "the rich can afford it".

In terms of top marginal rate, my gut is about the same. 1/3 sounds high, 1/2 sounds awfully high. The current law hits the 35% rate at $372,000 for a couple. I think there is room for another band well above that (starting somewhere above $1 million).

Getting back to a retirement issue, I can't help but comment on:
Quote:
Actually, since my taxes are probably going to support that kid in some way (schools, roads, etc), and he may not be paying taxes, I probably have a very small right to his time and energy, but I'm not going to ask for it anyhow.
You can figure that some day he'll be paying SS taxes and you'll be collecting benefits. That's when you get paid for the roads, schools, technology, or whatever that you built for him.
__________________

__________________
Independent 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
Harvesting tax losses this year? roger r FIRE and Money 19 10-30-2008 07:50 AM
Tax Question: 1st Year of Desig Roth Contrib TromboneAl FIRE and Money 1 02-04-2008 08:09 PM
End of year tax planning for wage slaves.... maddythebeagle Young Dreamers 22 12-22-2006 09:39 AM
Dory, i'd like to bring up... brewer12345 Other topics 27 03-19-2005 08:11 PM

 

 
All times are GMT -6. The time now is 04:04 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.