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Old 12-19-2011, 09:50 AM   #21
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I think the OP raises a valid concern and while REers may not have been targeted yet perse, its just a matter of time in this entitlement society. Its just like lawyers filing lawsuits, they will go after who ever has $$$s.
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Old 12-19-2011, 09:52 AM   #22
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Personally I think we should be a little more careful about using loaded and incendiary terms to demonize the positions of our "political adversaries." "Class warfare", like "fascist," "socialist" and "bigoted," are cheap and easy labels which intend to belittle and discredit those who hold the positions we are describing as such.

Just because someone may see a growing gap between rich and poor -- and its corollary, a decline in the middle class -- and think we need to do something about it doesn't mean they are "waging war on the rich" any more than those who encourage welfare reform are "waging war on the poor" or those who think we need to reform Social Security are "waging war on the elderly" -- to say nothing about positions on civil rights issues, where I won't go here but you can imagine how some folks who mean well can still be vilified as evil people with a few choice labels.

Frankly the universe or public policy discourse would be far more pleasant, IMO, without using intentionally inflammatory labels like these. And maybe if we stopped demonizing the other side once in a while, maybe we'd humanize them enough to listen to them with an open mind -- and if we listen, we may find they occasionally have a good point.

Controversial issues would not be controversial unless a lot of intelligent and well-meaning people are on both sides of it. For if that weren't the case, the course of public policy would be obvious and uncontroversial, wouldn't it?

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I think the OP raises a valid concern and while REers may not have been targeted yet perse, its just a matter of time in this entitlement society. Its just like lawyers filing lawsuits, they will go after who ever has $$$s.
As for this one, if there is more means testing and redistribution of wealth, it will most likely come in terms of annual income, not net worth, and as such some folks (myself included) are "engineering" a personal finance situation where one has significant (if not outlandish) assets but moderate current income -- keeping in mind that spending down already taxed assets can increase cash flow without adding to one's taxable income.
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Old 12-19-2011, 10:00 AM   #23
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I think the OP raises a valid concern and while REers may not have been targeted yet perse, its just a matter of time in this entitlement society. Its just like lawyers filing lawsuits, they will go after who ever has $$$s.
I'll follow your lead and get back to the OP and away from other issues -

from a pragmatic standpoint, I suspect we FIRE'd (even if not R early) will be OK if we keep our income to 'below the radar' levels, which many/most on this forum plan to do. It is tougher to tax accumulated wealth, and I think income will be the target (outside of Estate Tax).

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Old 12-19-2011, 10:20 AM   #24
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The only possible re-adjustment will be from the top .5% or top .1%. You know, the mega-wealthy who shape laws for themselves.

"[T]he top one-in-a-thousand taxpayers had average income in recent years that ranged between $5.2 million and $7.5 million annually."

That ain't you.

"The top 400 taxpayers paid a much lower rate. On an average income of $270 million each, their effective federal income tax rate was 18.1 percent in 2008, the latest year for which we have IRS data. A single worker earning less than $90,000 pays a higher rate than that."
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Old 12-19-2011, 10:38 AM   #25
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Question is how do you think this trend will impact the FIRE concept? If one diligently saves and lives within his means with FIRE in mind, they will be targeted in the future by a Political figures in government looking to pacify panicked non-savers.
This adds much new uncertainty to the FIRE concept. Thoughts??

SM
I don't think increased tax is much of an issue for those on here who are LBYM. Many of us live well on low incomes because we have eliminated the biggest budget items like mortgages and I don't see any appetite for increasing income taxes on the middle class or low income unless something like 9-9-9 actually takes off. There might be moves to increase capital gains or increase tax on big incomes ie over $250k. The capital gains might be an issue for those on here with large after tax savings, but for those with most money in retirement accounts that won't be such a big issue. Anyway there's a big lobby that against any increase to CGT.

The one area we might find some difficulty is reductions in SS and Medicare
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Old 12-19-2011, 10:51 AM   #26
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Why be so selective? We should fight fraud and immoral behavior wherever is occurs. I especialluy 'like' your wording 'the money that influences politics' - makes it sounds like the politicians are completely blameless, rather than willing/active participants. It's those big bad guys with the money, huh? What about those, who have taken an oath of office, who allow (encourage) themselves to be influenced by it?
+1, I don't exclude anyone.

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I'm curious if your salary at work is/was based on merit, or commission or anything like that. If so, do you live by your words, and share your merit raise with others who didn't get as much? I'm guessing "that is different" - this only applies to OPM?
Merit should be rewarded, charity is good for those that give and those that receive. We are in agreement. My socialism is based on my Christain upbringing....eye of needle etc and I see a progressive tax system and a socialist ethic as part of a caring society.

I choose to give to Charity and choose to live in a state with high taxes as I feel that my quality of life is better, even if I don't qualify for any of the social programs I help to pay for.
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Old 12-19-2011, 12:16 PM   #27
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I see a greater conflict in the near future that will affect many here. Increasing jealously between those who prepare themselves financially, and those that do not.

<snip>

SM
I'm not so sure the division is that cut-and-dried. Lots of working poor on the conservative side, and lots of rich and fabulous on the other...

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The parent's assets should be used to support the parents until the assets are exhausted ... then and only then should the government support the parents.
Many states have provisions to look back a few years, though I don't have any stats at hand.

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"The top 400 taxpayers paid a much lower rate. On an average income of $270 million each, their effective federal income tax rate was 18.1 percent in 2008, the latest year for which we have IRS data. A single worker earning less than $90,000 pays a higher rate than that."
It's worth noting that 18.1% of $270M is about $49M...
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Old 12-19-2011, 12:21 PM   #28
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I'll follow your lead and get back to the OP and away from other issues -

from a pragmatic standpoint, I suspect we FIRE'd (even if not R early) will be OK if we keep our income to 'below the radar' levels, which many/most on this forum plan to do. It is tougher to tax accumulated wealth, and I think income will be the target (outside of Estate Tax).

-ERD50
I hope your right. I for one will try to stay under the radar if possible, but I suspect that may become more difficult over time (especially if your wealth is in before tax $s), as its always been the ones in the middle who have paid out the most as a group in aggregate tax $s.
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Old 12-19-2011, 12:25 PM   #29
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It's worth noting that 18.1% of $270M is about $49M...
Right, and that's at a lower rate than someone earning $90,000.
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Old 12-19-2011, 12:26 PM   #30
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Right, and that's at a lower rate than someone earning $90,000.
With an AGI of $90,000, probably... with a grosss salary of around $90K and maximum 401K contribution, effective (not marginal) tax rate comes to more like 14% IIRC
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Old 12-19-2011, 12:45 PM   #31
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The parent's assets should be used to support the parents until the assets are exhausted ... then and only then should the government support the parents.
The parents' assets should be used down to a certain minimum amount before Government assistance starts. It might be $10k, but I don't think people should be put in the poor house before they can draw on assistance. Also real estate should be excluded when calculating the assets. Making people sell real estate to pay for long term care can devastate the family finances. Paying into Medicaid should be an insurance policy for our LTC, and also protect a certain minimum level of assets so that seniors can live in dignity and pass on some minimum level of assets to their children.
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Old 12-19-2011, 12:45 PM   #32
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As for this one, if there is more means testing and redistribution of wealth, it will most likely come in terms of annual income, not net worth, and as such some folks (myself included) are "engineering" a personal finance situation where one has significant (if not outlandish) assets but moderate current income -- keeping in mind that spending down already taxed assets can increase cash flow without adding to one's taxable income.
That's my hope (taxing income not net worth) and plan too. I sure hope you're right.

I wonder if there is any precedent of any country/government that has ever resorted to taxing net worth? Off to Google I go...
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Old 12-19-2011, 12:49 PM   #33
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Maybe we can increase our net worth targets beyond FIRE, to achieve TBTFRE status and mitigate any downside risk.













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Old 12-19-2011, 12:59 PM   #34
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Right, and that's at a lower rate than someone earning $90,000.
Yes, I get that, though I think some don't. But how much more than $49M should they be taxed?
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Old 12-19-2011, 01:27 PM   #35
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That's my hope (taxing income not net worth) and plan too. I sure hope you're right.

I wonder if there is any precedent of any country/government that has ever resorted to taxing net worth? Off to Google I go...
I am not sure whether Ziggy thought my post was referring to net worth which it wasn't. My point is that if we have $s (interpret that to mean annual income), we'll continue to be a target for redistribution, unless you can stay beneath the radar where ever that level ends up to be.
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Old 12-19-2011, 01:30 PM   #36
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I see a greater conflict in the near future that will affect many here. Increasing jealously between those who prepare themselves financially, and those that do not. Those that do not will increasing seek a government solution to their lack of planning. We see that now but but it will increase as more Baby Boomers face retirement unprepared.
Question is how do you think this trend will impact the FIRE concept? If one diligently saves and lives within his means with FIRE in mind, they will be targeted in the future by a Political figures in government looking to pacify panicked non-savers.
This adds much new uncertainty to the FIRE concept. Thoughts??
Gosh, I hope I can get this post up before Porky sings his song.

Lemme get this straight:
These Boomers are hypothetically unable to save enough money to support themselves in retirement. However they're somehow able to exert political pressure on their elected representatives to "do something" to give them enough money to support themselves in retirement. This despite the fact that they have no assets to spare to bribe support the election campaigns of these politicians.

Meanwhile Congress struggles to figure out how to balance the current deficit budget, let alone find more subsidies for the allegedly impending indigent.

If these evil geniuses are indeed geniuses, then why ain't they already rich? And for those that are already rich, then why would they need the support of someone who's not?

I don't think this impoverished demographic's collective stupidity lack of foresight can be explained by conspiracy.

I think they're going to do what all the media pundits are threatening that they'll have to do: work until they die, live within their Social Security benefits, and develop a taste for Friskies.
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Old 12-19-2011, 01:30 PM   #37
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I wonder if there is any precedent of any country/government that has ever resorted to taxing net worth? Off to Google I go...
This is pretty common in Europe, and in the USA, Florida gave it a shot for a while as an intangible asset tax, a property tax on ones investment portfolio.
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Old 12-19-2011, 01:32 PM   #38
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The interest rate environment rewards debtors and hurts savers. In that sense, those who saved are already being penalized.
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Old 12-19-2011, 01:33 PM   #39
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I wonder if there is any precedent of any country/government that has ever resorted to taxing net worth? Off to Google I go...
France and Switzerland do, IIRC.
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Old 12-19-2011, 01:35 PM   #40
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Yes, I get that, though I think some don't. But how much more than $49M should they be taxed?
How much more than 18.1% should they be taxed? Since that 18.1% is largely a result of the Bush-Obama tax cuts, letting them expire would be a good start.
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