More Doom & Gloom - 15 examples

[RonBoyd]

Wealth And Inequality In America

(Click on "View as one page" to avoid that silly Slideshow feature.)

While politicians gloat about our "recovery," our poor are getting poorer, our average wages are still falling behind inflation, and social mobility is at an all-time low.

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[tryan]

Interesting ... couldn't help but think a graph of : TV, car, computer, appliance ownership would show the exact opposite result.

Most are content being "poor".

 

[newporttony]

Let me guess the solution--tax the heck out of the rich to ensure everyone is poor.

 

[eridanus]

No, we continue to ignore it and hope for the best. What could go wrong?

 

[yakers]

Most are content being "poor".

Extreme inequality does lead to serious social and political unrest. The 'robber barons' were somewhat constrained a century ago, they are not remembered fondly.

 

[shotgunner]

This thread should be moved to wherever political threads are located. The article is pure drivel IMO. I am surprised there is no statement to the effect this article has been paid and authorized by the DNC.

 

[ls99]

Skimmed through the graphs a few hours ago, then went off for coffee. Good thing, these types of class warfare articles usually get me ticked off big time.

It is the modern revised version of the old russky regime's proletariat v kulaks mantra. I think I'll stop here before going off on a long rant.

Cheers.

 

[travelover]

Is it just me or has there been a rash of political threads being posted outside the political forums? Are you guys getting tired of bashing each other with the foam rubber bats and need to bring the brawl outside?

 

[BigNick]

It's billed as "rich v poor" but is seems to be much more about "rich v everyone else". It hardly mentions the genuinely poor at all.

There may or may not be a genuine crisis in the American middle class, but that seems to be the main theme of the slideshow (and the one that follows it, in fact even more so). Interesting that it comes from a site which seems to be associated with a business publication, not a political party (it always seems to me that both major US parties seem to be after exactly the same "middle class" vote).

 

[Westernskies]

Is it just me or has there been a rash of political threads being posted outside the political forums? Are you guys getting tired of bashing each other with the foam rubber bats and need to bring the brawl outside?

Not sure about that, but there has been a rash of complaining about who is posting where lately...

 

[photoguy]

What does it matter if the rich get richer, when the average middle class lifestyle in the U.S. is still quite comfortable?

 

[winger]

Let them eat cake!

 

[ERD50]

What does it matter if the rich get richer, when the average middle class lifestyle in the U.S. is still quite comfortable?

Exactly (and I'm not saying that is or isn't the case). That is why I didn't read past the first line in that article (bold mine):

The gap between the top 1% and everyone else hasn't been this bad ...

They should give the numbers and let the reader conclude if it is 'bad' or not, or how bad it is. When I see a first line like that, it tells me that they made up their mind (and yours for you), and here are 15 charts cherry-picked to support our viewpoint. I don't expect any balance in there.

There's a chance I'm wrong, and that really is a good article, but experience tells me the odds are so against it, it isn't worth my time. If someone here can report otherwise, maybe I'll take a deeper look.

Is it just me or has there been a rash of political threads being posted outside the political forums? Are you guys getting tired of bashing each other with the foam rubber bats and need to bring the brawl outside?

I'm not sure what your concern is. Class warfare is extremely relevant to FIRE'd people, as we are viewed by some as the 'Haves'. I think we should keep ourselves educated on the public opinion and policy in this area. If you prefer to keep ignore this subject, why not just skip the thread? There are plenty of threads I don't read.

Maybe it is because I normally go to the 'portal' view, but I rarely even notice which sub-forum something is posted to. I might take a look if the title is too open-ended to provide a clue, so I'm not sure why some people are so concerned about which sub-forum something is posted to.

-ERD50

 

[youbet]

. Class warfare is extremely relevant to FIRE'd people, as we are viewed by some as the 'Haves'.

Yes indeedy............ Anyone with the wealth (pensions, assets or combo) to live well without working is held suspect by a growing number of folks these days. It's easy to rant about the ultra-rich, but the growing target seems to be anyone who can live without working or active investing.

There have been a number of comments here on the forum regarding financial management techniques designed to keep reportable income low to avoid taxes, means testing of benefits, etc. I don't think that is going to be easy going forward, but "keeping your head down" surely should be the desired goal of any FIRE'd person.

 

[ziggy29]

There have been a number of comments here on the forum regarding financial management techniques designed to keep reportable income low to avoid taxes, means testing of benefits, etc. I don't think that is going to be easy going forward, but "keeping your head down" surely should be the desired goal of any FIRE'd person.

I think it depends on consumer behavior moving forward. The recent trends are increasingly LBYM, hoarding cash, paying off debt and buying less stuff in the face of an uncertain economic future (particularly where jobs are concerned).

The Great Depression introduced "frugality for life" for a lot of people; even those who later became rather wealthy often retained their cheapskate ways for the rest of their lives. The experience of deep economic morass never faded from their psyche. It remains to be seen whether the recent mess will create a permanent shift in consumer attitudes in the decades to come. If it does, there will be a lot more "asset rich" households and means testing will have to come after them. If consumer spending rebounds close to the 1980s through 2007 levels (relative to income), the number of households which can achieve asset rich/income poor status will remain small and perhaps "fly under the radar" in terms of avoiding a future of asset-based means testing rather than just income-based.

If there is an increase in saving/investing/paying off debt/hoarding cash in the longer term, there may be no way to get around asset-based means testing, though. Which is a shame for those of us who were already frugal before it became cool in the last couple years.

 

[growing_older]

I am not a CEO, nor a top 1% or 10% or whatever earner. I do feel more than a little bit envious of those "haves" with more wealth than me (and there are quite a lot of them). But I also object to the statistical tricks these kinds of graphs use. High earners income tax rates have come down, but are still substantially higher than rates on lower incomes, thus total taxes collected from a high earner is a product of higher rates and higher income so still a much much higher tax in absolute dollars. To draw a graph of that and argue that we need to stick it to the rich more because we are sticking it to them less than we (fictionally) did in the past is more political theater than numerical analysis. BTW, I think those high rates made for clever tax shelters more than anything, which really only made the "gap" between the rich-enough-to-play-legal-games and everyone else worse.

 

[youbet]

If there is an increase in saving/investing/paying off debt/hoarding cash in the longer term, there may be no way to get around asset-based means testing, though. Which is a shame for those of us who were already frugal before it became cool in the last couple years.

"Asset based means testing" will likely be more easily done than anticipated. And higher taxes driven by holding assets can be engineered too. For example, real property is easily taxed via real estate taxes. Cars can (and already are in some states) be taxed via personal property taxes. Stocks and bonds can be indirectly taxed by sharply increasing investment income taxes and capital gain taxes. (If you want to hold stocks and bonds that have no earnings and collect no capital gains from them....... well that's going to be an expensive way to avoid means testing.) The tax free status of municipal bonds could be revoked. Etc.

None of this would require the gov't to actually have a listing of your assets and apply a direct tax.

I'm with ya in spirit Zig, but feel that avoiding high taxes on held assets, asset based means testing and income driven means testing to establish eligibility for and the amount of benefits isn't going to be easy.......

 

[ziggy29]

"Asset based means testing" will likely be more subtle and indirect than anticipated. For example, real property is easily taxed via real estate taxes. Cars can (and already are in some states) be taxed via personal property taxes. Stocks and bonds can be indirectly taxed by sharply increasing investment income taxes and capital gain taxes. (If you want to hold stocks and bonds that have no earnings and collect no capital gains from them....... well that's going to be an expensive way to avoid means testing.) The tax free status of municipal bonds could be revoked. Etc.

But the point is that there is (and probably will continue to be) ways to beat the system. Sure, you can slap property taxes on folks, but one can choose to be a multi-millionaire and live in a $100K house with fairly low taxes even if you can afford much, much more. We can afford considerably more house than we have, but property taxes were a major factor -- perhaps the *main* factor -- in our opting for much "less" house than that.

Right now most of the "wealth taxes" are fairly avoidable. It may or may not be worth the lifestyle and/or opportunity costs of tax avoidance, but the ability is there. They'd have to close a lot of tax avoidance options if they don't apply a direct tax or means testing on assets or net worth.

 

[youbet]

BTW, I think those high rates made for clever tax shelters more than anything, which really only made the "gap" between the rich-enough-to-play-legal-games and everyone else worse.

Me too.

Without commenting on present or future tax rates, I'd say that eliminating loop holes and simplifying the tax code are the real answers. If the top tax bracket is destined to go back to the moon, fine. But structure the code so that folks with income at that level actually pay without exception.

 

[youbet]

But the point is that there is (and probably will continue to be) ways to beat the system.

Maybe today's system as you know it in Texas Zig. Try visioning tax schemes for all states being cherry picked and brought together. High state income tax. High real estate tax. High sales tax. High personal property tax. High inheritance tax. Etc. It would be hard to find a place to hide, despite the lifestyle you choose. The gov't is well aware of the "millionaire next door" types and dipping into their pockets could be easily done. Asset based means testing could be a function of the taxes you pay. If your investment income is "x" then ownership of investment assets is assumed and a phase out of you benefit subsidies begins. This could be similar to the phasing out of itemized deductions and personal exemptions that is returning to fed taxes next year.

Right now most of the "wealth taxes" are fairly avoidable. It may or may not be worth the lifestyle and/or opportunity costs of tax avoidance, but the ability is there. They'd have to close a lot of tax avoidance options if they don't apply a direct tax or means testing on assets or net worth.

Well, my point is that I'm planning on "them" closing a lot of the tax avoidance loopholes. They're going to need to. Or, let inflation jump up for a while.

There is little you own that cannot be taxed without much effort. Your house, your car, your investment assets (directly or through sharply increased investment income taxes).

Again, and we're each dealing with our own opinions here so no right or wrong, I think holding assets and reducing taxable income to reduce taxes and avoid means testing is a great goal. I'm not optimistic that it's going to work within a decade or so........

But I hope you're right. It will be frustrating to have lived a frugal, responsible life and have my family's retirement situation be only a tad better than someone who didn't save, invest, postpone consumption, etc.

Sometimes you bite the bear, sometimes...........

 

[FIREd]

I just have to look at how my folks live in Europe to have a taste of what might be coming our way in the future. In a land where everything is heavily taxed and where the "rich" are despised, those who live simply, take advantage of tax loopholes (you can be sure that there will always be loopholes to cater to special interests) and keep a low profile will continue to do well...

 

[growing_older]

Since I will have no pension when I retire, I have been saving up a big enough IRA to pay my expenses at that future time. Meanwhile, other people I know have not saved as much but will have a pension, so their expenses will also be covered. When I take income from my IRA or when they receive monthly pension check, we are both taxed about the same - albeit I have a little more control about when I realize the income and they have a little less risk whether they get the income. If you add a new tax that specifically targets assets, then I will pay a lot and they will pay a little. This seems inherently unfair, but perhaps not so impossible since there are few people with large IRA so as a voting block it is hard to protect our interests.

 

[ziggy29]

When I take income from my IRA or when they receive monthly pension check, we are both taxed about the same - albeit I have a little more control about when I realize the income and they have a little less risk whether they get the income. If you add a new tax that specifically targets assets, then I will pay a lot and they will pay a little. This seems inherently unfair, but perhaps not so impossible since there are few people with large IRA so as a voting block it is hard to protect our interests.

True, if they don't consider the "present value" of the pension in the asset calculations. That would yet again screw the retirement prospects of the pensionless class, as if they haven't had their retirements fouled already.

Another option would be as follows: if pensions and the "present value" of a pension isn't included, then the pensionless should have the ability to shield assets from taxes and means testing if used to purchase an annuity. I think something would need to be done to avoid further dividing the haves and have-nots along the lines of whether one has a pension.

 

[Pete]

This is one of those topics that brings out the name callers. "Class warfare, socialists...."

We need to get past this stuff and talk about real possibilities. Capitalism creates rich and poor. Reaganomics was wrong...money trickles up not down. The gap between rich and poor continues to rise, with people and nations. It's very possible that this can create social, economic, and political instability.

As a flea living off this dog (the world economy), it's very important to me to keep this dog alive.

Can't we have an intelligent conversation about a real problem without name calling?

 

[Westernskies]

Reaganomics was wrong...money trickles up not down. The gap between rich and poor continues to rise, with people and nations.

Can't we have an intelligent conversation about a real problem without name calling?

Apparently not both in the same post.