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Old 12-09-2013, 05:29 PM   #41
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It is a courtesy to members, that way they need not click on an unknown link and go to another site. It is also part of our posting guidelines, seen here.
Thx, Not sure I would have known what a naked link was until now, but I can assure you no one is naked in it.
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Old 12-09-2013, 05:29 PM   #42
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It is a courtesy to members, that way they need not click on an unknown link and go to another site. It is also part of our posting guidelines, seen here.
Yes. In the holiday spirit and to let REW put his feet up, I'll borrow his phrase: you have it backwards. I know I don't open most links, none without an intro/preview.
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Old 12-09-2013, 05:33 PM   #43
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Not so much, really. The early higher marginal tax rates are not very meaningful because almost no one paid them. There were many ways to shield income from taxes, and you can bet they were heavily used. With the reductions in the top tax rate came reforms that closed these loopholes.

Here's the picture since 1980:


Note that this is FIT, it doesn't include payroll taxes, sales taxes, etc.

Edited to add: Oops, I cross-posted with Midpack
Hey, this is classified information; too difficult to reconcile with the popular polarity of exploiters and victims!

I long to find away to get into some victim class. It's the only way to live in modern America, and likely much of the rest of the world.

Ha
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Old 12-09-2013, 05:33 PM   #44
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Yes. In the holiday spirit and to let REW put his feet up, I'll borrow his phrase: you have it backwards. I know I don't open most links, none without an intro/preview.
The link contains a video explaining the basic economics of funding retiree entitlements and the effect on future workers. Enjoy.
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Old 12-09-2013, 05:39 PM   #45
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About the marginal tax rates... and the point that few paid them...

Because they were so high, there was no incentive for top level execs to receive more pay... @ 90% tax a $1,000,000 salary would equate to $100,000 in the pocket. @67 % tax, a $300,000 salary would equate to $100,000. @ 33% tax a $150,000 salary would equate to $100,000.

Sure... the numbers weren't quite like that, but you get the idea. The "extra money went to the government.
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Old 12-09-2013, 05:40 PM   #46
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W2R,

Well said. Being rich is a state of mind that has little to do with annual income. Maybe we need a satisfaction index rather than an income scale to compare ourselves to others.
"Being rich is more about what you need than what you have".
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Old 12-09-2013, 05:45 PM   #47
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Read somewhere recently a quote about comparisons leading to a life a misery.

I can't speak for any of you, but I would venture to guess that most of you feel incredibly wealthy.

Yesterday, I'm reading about this great doctor in England who wrote a small tome. Before even finishing the article, I switch to my other monitor, look up the book on Amazon, find it's available used in Ireland. Within one minute I bought the book for under $7 including shipping and will be arriving in my mailbox.

For me, that's just one little thing that's unbelievable that is common stance in today's times.
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Old 12-09-2013, 05:45 PM   #48
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The nerve of those people! Don't they realize they are just making others feel bad? They need to knock off this hard work, planning, and education stuff - it just leads to inequality, and we can't have that!

-ERD50
Yes, it lowers someones self-esteem if they must work and plan for themselves.

It would be interesting to see a comparison to being 'Rich' and being 'Poor' in the rest of the world as compared to the United States. Or, for that matter to the U.S. 100 years ago? I have seen such studies but cannot lay my hands on them at the moment...

I always question the concept that something was better in the past, as that is usually not the case when it comes to economics and poverty in America.
I have seen real poverty elsewhere in the world, trust me it is vastly different than here.

The article quoted by the OP did have a a small redeeming quality. That was the truth of the last sentence:

"A dollar is best in your hand rather than the government's.".
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Old 12-09-2013, 05:45 PM   #49
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About the marginal tax rates... and the point that few paid them...

Because they were so high, there was no incentive for top level execs to receive more pay... @ 90% tax a $1,000,000 salary would equate to $100,000 in the pocket. @67 % tax, a $300,000 salary would equate to $100,000. @ 33% tax a $150,000 salary would equate to $100,000.

Sure... the numbers weren't quite like that, but you get the idea. The "extra money went to the government.
You don't get or are ignoring what those two graphs say. I suppose it's OK to have your opinions formed by your politics, but your facts? The actual in practice numbers are not only "not quite like that", they are nothing like that.
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Old 12-09-2013, 05:47 PM   #50
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This clip seems appropriate here.

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Old 12-09-2013, 06:11 PM   #51
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I think the big issue is a reduction in upward income mobility. People will accept being poor if they think they or their kids can improve their financial position through education and hard work. I think most poor people still think this but all studies I have seen paint a picture of decreasing upward mobility. Furthermore, the US doesn't compare very well with the mobility of other OECD countries, Including Canada. Midpack, maybe you can find some data or a graph on this?
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Old 12-09-2013, 06:33 PM   #52
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I think the big issue is a reduction in upward income mobility. People will accept being poor if they think they or their kids can improve their financial position through education and hard work. I think most poor people still think this but all studies I have seen paint a picture of decreasing upward mobility. Furthermore, the US doesn't compare very well with the mobility of other OECD countries, Including Canada. Midpack, maybe you can find some data or a graph on this?
Sorry, I just had a hot buttered rum with my bride (it's really cold here), so I'm not up to searching for charts anymore. And the neighbors are coming over for MNF. See all ya'll mañana!

Interesting the Druckenmiller info referenced by Theduckguru above, that's the thread I self-censored just a few days ago...pivotal issue for retirees, but politics are inevitable IMO.
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Old 12-09-2013, 06:51 PM   #53
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Hey, this is classified information; too difficult to reconcile with the popular polarity of exploiters and victims!

I long to find away to get into some victim class. It's the only way to live in modern America, and likely much of the rest of the world.

Ha
Ha, here is one of my favorite links of all time that may help. It is on how to pay zero income taxes -

ROI: How to Avoid Paying Income Taxes - WSJ.com

Excerpt-

"I spoke to Gil Charney, principal tax researcher at H&R Block's HRB +0.03% Tax Institute, to see how a regular Joe could pull a GE. The verdict: It's more feasible than you think—especially if you're self-employed."
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Old 12-09-2013, 06:55 PM   #54
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I long to find away to get into some victim class. It's the only way to live in modern America, and likely much of the rest of the world.

Ha
All you have to do is declare yourself a victim of something. Or make up your own victim class. all it takes is the proper mindset! (apologies to actual victims of criminal activity)
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Old 12-09-2013, 06:56 PM   #55
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Sorry, I just had a hot buttered rum with my bride (it's really cold here), so I'm not up to searching for charts anymore. And the neighbors are coming over for MNF. See all ya'll mañana!

Interesting the Druckenmiller info referenced by Theduckguru above, that's the thread I self-censored just a few days ago...pivotal issue for retirees, but politics are inevitable IMO.
I thought Druckenmiller's position was interesting. You may notice he excluded any of his wealth from his solution.
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Old 12-09-2013, 07:26 PM   #56
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You don't get or are ignoring what those two graphs say. I suppose it's OK to have your opinion formed by your politics, but what does it accomplish? The actual in practice numbers are not only "not quite like that", they are nothing like that.
I guess I don't get it... Am not very smart about money...
I don't have much in politics here though, so it's innocent...

Edit: Anyway... Here's the logic I was looking at, to come up with the comment...
.................................................. ...............................................
In 1963, the top marginal tax rate for a single person filing separately was 90% on amounts over $200,000, so THAT tax on the $1 million would be 90% of $800,000 or $720,000. Assuming that the taxed individual was taxed at 50% for the first $200,000 ... $100,000.... That would leave the net income after taxes
$1,000,000 minus $720,000, minus $100,000 for a total after tax income of $180,000.

50 years later...

In 2013, the top marginal tax rate for a single person filing separately is 39.6% on amounts over $400,000, so THAT tax on the $1 million would be 39.6% of $600,000, or $237,000. Assuming that the taxed individual was
taxed at 30% for the first $400,000, $120,000... That would leave the net income after taxes
$1,000,000 minus $237,000, minus $120,000 for a total after tax income of $643,000.
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Old 12-09-2013, 07:43 PM   #57
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I think the big issue is a reduction in upward income mobility. People will accept being poor if they think they or their kids can improve their financial position through education and hard work. I think most poor people still think this but all studies I have seen paint a picture of decreasing upward mobility. Furthermore, the US doesn't compare very well with the mobility of other OECD countries, Including Canada. Midpack, maybe you can find some data or a graph on this?
I'm not sure if this is exactly the information you were looking for, Danmar, but here is the Wikipedia entry on the Gini Coefficient.

List of countries by income equality - Wikipedia, the free encyclopedia

Since the 1970s, Canada's Gini (after taxes and transfers) has risen from 0.304 to 0.324. The US Gini has risen from 0.316 to 0.378. This suggests that income inequality is rising, particularly in the US.

When it comes to upward mobility, the data are mixed, but it appears that being the son of a father who is in the bottom 20% of all earners makes it more difficult to be upwardly socially mobile in the US than in Scandinavia.

Prosperity & Upward Mobility by Country
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Old 12-09-2013, 07:55 PM   #58
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I'm not sure if this is exactly the information you were looking for, Danmar, but here is the Wikipedia entry on the Gini Coefficient.

List of countries by income equality - Wikipedia, the free encyclopedia

Since the 1970s, Canada's Gini (after taxes and transfers) has risen from 0.304 to 0.324. The US Gini has risen from 0.316 to 0.378. This suggests that income inequality is rising, particularly in the US.

When it comes to upward mobility, the data are mixed, but it appears that being the son of a father who is in the bottom 20% of all earners makes it more difficult to be upwardly socially mobile in the US than in Scandinavia.

Prosperity & Upward Mobility by Country
Something to consider is that the US has a much more heterogeneous population than any Scandinavian country. The bottom 20% of all earners in Sweden for example is a very different bottom 20% than that which is found in the US.

I despair of anything other than political points ever coming from these random social sound bites. Someday we will be ruled by computers, and iMO they likely will do a better job of it.

Ha
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Old 12-09-2013, 07:56 PM   #59
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Of course! But I guess most of us on here would probably equate the true measure of being rich in terms of happiness vs $s. But on the monetary scale, $250K aint much.
You should give $25K a try, it likely would change your whole perspective.
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Old 12-09-2013, 08:06 PM   #60
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Since the 1970s, Canada's Gini (after taxes and transfers) has risen from 0.304 to 0.324. The US Gini has risen from 0.316 to 0.378. This suggests that income inequality is rising, particularly in the US.
The increase in income inequality is happening in virtually every developed country--countries with strong social welfare nets and ones with weak safety nets, countries with extremely high taxes on the rich and those with flatter taxes. With this type of very broad trend it is logical to look beyond internal national factors for causation. Likely factors:
-- Low-skilled labor is decreasing in value in the developed countries. The low-skilled labor is being done overseas (where the work is resulting in >tremendous< improvements in overall quality of life unseen in their history). A strong back just ain't worth as much as it was 50 years ago in the US (when we had a post-war labor shortage and industrial boom). The remaining low-skill jobs are sought by more people (including legal and illegal immigrants), putting downward pressure on the per-hour wage.
-- Capital has retained its earning power. As the world economy grows, people with money who can put it to work effectively have gotten good returns. Since the people with money are able to make more money, this factor contributes to an increase in income inequality.
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