Affluent Boomers

[ERD50]

ERD, I'm not sure you're being honest. You're ignoring inflation - a cardinal sin on this forum.

Take a reasonable salary for 2007, say, $63,000.

That is incorrect, I did not ignore inflation. I was looking at inflating UP from my 1982 income, you are looking at inflating DOWN form 2007 income of 63,000. Not right or wrong, just a different angle, which will be affected by the 'progressiveness' of the tax system.- and I did not publish the whole table (as I pointed out)

There were 2% increases about every few $K, so $30,089 would have been taxed @ 12, 14, 16, 19, 22, 25, 29, and 33%.

Table says $5632 for $30,089 - 18.7% of income back in 1982. Versus your 13.7% of income today (assuming 3% inflation is a good number).

18.7% or 13.7% - which would you prefer?

-ERD50

 

[ERD50]

By any chance, did you trade the cow for some beans? Did the beans grow into a vine reaching to the clouds? Did you climb it? Was there a giant up there?

Dammit! My cover's been blown! And you figured the 'zipper' connection too!

So much for anonymity on the internets!

-ERD50 (or somebody)

 

[kombat]

re: healthcare

kombat - would you like to pay my retiree health insurance? It's over $8500 per year.

You cut out the other part of my comment, but I conceded that this is more of an issue in a country like Canada, with socialized healthcare, than it is in an "every man for himself" country like the US. Being Canadian, I can only relate my own personal experiences and roadblocks in this particular country.

Time for you to do some homework, or doesn't the 'current' generation find that necessary? Just about every complaint you have is unfounded. In fact, they are more like the opposite of what you claim.

Well, so far the total stands at "1." You pulled out some tax tables from 1982 and demonstrated that federal income taxes are 1.2% lower now than they were then. You ignored state income taxes, states sales taxes, property taxes, capital gains taxes, or social security premiums (no one has yet told me if this is actually itemized on your tax bill as it is in Canada, or if it is "invisibly" rolled into your general taxes).

No capital gains tax!!! Gee, I didn't file a schedule D that year, but looking at the forms, it appears to go right under 'income' so I'm pretty sure it would have been taxed at my marginal rate of 39%. Lucky me.

I'm not sure that's accurate. In Canada, we fill out a separate schedule that determines what percentage of the capital gains we must pay taxes on (currently 50% of the gains are taxed as regular income). After performing that computation, the amount that is considered "taxable income" is copied over into the general return and added to our other income. So the entire gain is not taxed as income, only a portion of it. But it is just that portion that shows up in the return, unless you dig out the specific schedule that was used to produce that number. I'm not sure if this would be the case with US capital gains taxes in 1982, but it's possible you're glossing over some important details here.

 

[W2R]

You ignored state income taxes, states sales taxes, property taxes, capital gains taxes, or social security premiums (no one has yet told me if this is actually itemized on your tax bill as it is in Canada, or if it is "invisibly" rolled into your general taxes).

State income tax, federal income tax, social security payments, and Medicare payments are all itemized on your paycheck stub and deducted from your paycheck (for most jobs) in the U.S.

We don't get a tax bill, but are required to compute our taxes ourselves and send in the form either with a check for additional taxes, or claiming a refund.

Helpfully yours,

W2R

 

[JPatrick]

Hey, ERD. Don't forget to tell them we had to walk to school barefoot...in the snow...uphill both ways.

Certainly those conditions are tough enough by themselves, but throw in the need to battle the scorpions, chiggers, and rattlesnakes every step of the way and you've got a real unpleasant experience

 

[REWahoo]

Certainly those conditions are tough enough by themselves, but throw in the need to battle the scorpions, chiggers, and rattlesnakes every step of the way and you've got a real unpleasant experience

Yep. So bad that some people moved..."headed for the hills" so to speak.

 

[youbet]

Well kombat, based on what you're saying, I guess you young folks up nort der are indeed screwed big time. I mean, you young guys gotta feel like there's an 80 ft jack pine sticking outta yer butts they're screwin' ya so bad. It's unfortunate and I feel bad for ya. Hopefully you folks can get something going with changes in the government, or whatever, to improve your lot in life.

Just so you know, I'm doing all I can to help. Despite an unfavorable exchange rate, I'm going back to the Red Lake area this summer to chase wallies and drink Molson. Based on what we usually spend, you'd think this alone would be enough of an economic boost to allow your government to lower some of those onerous taxes so you at least stand half a chance.

 

[ERD50]

I'm not sure that's accurate. In Canada...

Heck, it's tough enough to adjust for 2007 to 1982, numbers don't tell the whole story. I'm not going to even attempt to throw a different countries taxation and social programs into the mix.

Check my correction to your post. Income taxes at that 63,000 and 30,089 level were 36.5% higher in 1982 vs 2007 (18.7% / 13.7% = 1.3649).

State income taxes, property taxes are so region specific, and I've moved, there is not much point in me trying to dig those up.

But I think the general trend holds - people in the 60's and 70's in the US were not living in some wonderful low tax rate era.

A little more general info for you:

Preferential Capital Gains Tax Rates

The Revenue Act of 1964 significantly lowered all tax rates on ordinary income. The top rate, which applied to joint filers earning at least $200,000, was cut from 90 to 70 percent. The Tax Reform Act of 1969 phased in from 1970 to 1976 and raised alternative capital gains tax rates, making the maximum tax rate on capital gains 49 percent, the highest level since 1921.

90%! 70%!

-ERD50

 

[aenlighten]

Way back when

You would really have to go back to before WWII for taxes to be as low as they are now. In 1942, the maximum capital gain rate was 25% and this held until 1969, when it rose to 35% by 1973. It was reduced to 28% in 1978 and down to 20% in 1982. The maximum marginal income tax rate was 90% from WWII until 1969 when it was reduced to 70% and down to 50% in 1982. Federal revenues as a percent of gdp since the 1970s have ranged from 17% to 21%, lowest during the 2001 recession. Now don't you feel spoilt?

 

[youbet]

Thanks for the memory refreshers everyone! It's just past noon here and I already forgot what I had for breakfast, so your reminders about old tax rates, etc., really help.

Let's see....... If I add your numbers to the little I can remember from the time..... It's 1969, I'm fresh out of college working night shift in an inner city factory. I'm about to go through a period of stagflation, including inflation rates up in the low teens. The market sucks. Taxes are high. I'm holding draft number 25. DW wants to start a family. (There's a part of that idea I like a lot, but the nine month later part is a little worrisome, given the economy, etc.) I don't know it at the time, but I'll be laid off of that job due to a long, bitter strike by the Steel Workers Union. Bye-bye DBP pension! People retiring in this era find themselves worse off than folks who retired just before the Great Depression......

Yep, I remember now, those were THE GOOD OLD DAYS!

But all's well that ends well and no complaints here!

 

[REWahoo]

... social security premiums (no one has yet told me if this is actually itemized on your tax bill as it is in Canada, or if it is "invisibly" rolled into your general taxes).

Kombat, I don't see where you ever got an answer to this question. We in the US do pay a separate and additional tax for SS and Medicare insurance (health coverage for age 65 and up). The SS tax rates for 2008 are 6.2% for all earnings up to $102,000. The employer pays a matching amount, which means if you are self-employed you pay 12.4%. Medicare taxes are 1.45% on all earnings for both employee and employer, no limit.

 

[kombat]

Kombat, I don't see where you ever got an answer to this question. We in the US do pay a separate and additional tax for SS and Medicare insurance (health coverage for age 65 and up). The SS tax rates for 2008 are 6.2% for all earnings up to $102,000. The employer pays a matching amount, which means if you are self-employed you pay 12.4%. Medicare taxes are 1.45% on all earnings for both employee and employer, no limit.

Thanks, REWahoo, that's the info I was looking for. It sounds like it's not that different from Canada. In Canada, CPP (Canada Pension Plan, our version of Social Security) is automatically deducted from our paycheques up to an annual maximum of around $2,000 (for 2007). I believe there is also an employer-matching portion, similar to Social Security.

What I don't understand, then, is why there's a Social Security crisis in the US. In Canada, they simply adjusted the premiums upward to ensure that the program is fully-funded. Why can't the US simply do the same thing? Is there some sort of legal barrier to allowing them to increase the premiums to ensure that the program can meet its payout obligations? Just curious.

 

[REWahoo]

What I don't understand, then, is why there's a Social Security crisis in the US. In Canada, they simply adjusted the premiums upward to ensure that the program is fully-funded. Why can't the US simply do the same thing? Is there some sort of legal barrier to allowing them to increase the premiums to ensure that the program can meet its payout obligations? Just curious.

Here is an interesting way for you to answer your own question:

American Academy of Actuaries Social Security Game

 

[aenlighten]

Indeed there is.

Is there some sort of legal barrier to allowing them to increase the premiums to ensure that the program can meet its payout obligations? Just curious.

Indeed there is. They are called Republicans. Why tax all those poor working people when we can just make them work longer for reduced benefits?

 

[starter82]

Here is an interesting way for you to answer your own question:

American Academy of Actuaries Social Security Game

I solved it in four steps.

 

[clifp]

The difference is that cost of entry has increased. It took 2 weeks of on-the-job training for the village idiot to learn to make a buggy whip or a pair of spats.

It takes 10years+ to get a Ph.D in computer science and a certain amount of treasure and lost opportunity. One may find at the end of that time that one's field of endeavor is no longer in demand.

I know of B.S.-degreed programmers being retrained in health fields to gain employment. A number of auto workers whose jobs are gone forever are now finishing government-sponsored IT retraining just in time to find they can not find work in their new field and need to be re-retrained in something else. I suppose the wise college student simultaneously pursues two widely divergent fields and hopes that one will pay off.
To end on a positive note, at least a man can end up erudite from a lifetime of "trainings", if impecunious.

The most recent data (9/2005) I could find from IEEE has EE unemployment at 2.1% pretty much the historical rate. Maybe its changed in the last couple of years but other than right after the dot com bubble Engineer unemployment has always remained very low 2-3%. I remember when I graduated I had 6 or 7 job offers, one of fellow EE buddies had to struggle to get one. This despite our similar GPAs and my friend being technically sharper than I was. I am quite sure my friend came across poorly in interviews. I suspect that most recent engineering grad that can't find job, either really don't deserve their degrees or never learned how to interview. The demands is pretty clearly there for technical folks.

 

[ERD50]

The difference is that cost of entry has increased. It took 2 weeks of on-the-job training for the village idiot to learn to make a buggy whip or a pair of spats.

It takes 10years+ to get a Ph.D in computer science and a certain amount of treasure and lost opportunity. One may find at the end of that time that one's field of endeavor is no longer in demand.

barbarus, since you keep putting this in the perspective of it being so much different in the 'old days', let my relate a little joke I heard back about 1974:

A woman is proudly showing a guest some pictures of her three grown sons. 'This is my eldest', the woman beams, 'he has a Ph.D!'. She points to the next photo, 'This is my next boy - he has a Masters Degree!'. Then she goes to the next photo, 'This is my youngest - he has a JOB!'.

yeah, I know, just anecdotal, but there must be something to it, right?

-ERD50

 

[Spanky]

A woman is proudly showing a guest some pictures of her three grown sons. 'This is my eldest', the woman beams, 'he has a Ph.D!'. She points to the next photo, 'This is my next boy - he has a Masters Degree!'. Then she goes to the next photo, 'This is my youngest - he has a JOB!'.

That's a good one.

 

[Spanky]

I suspect that most recent engineering grad that can't find job, either really don't deserve their degrees or never learned how to interview.

I vote for the latter.

 

[Ronstar]

I vote for the latter.

I interview a lot of engineering candidates and most of them don't show good interviewing/personal/social/communication skills in the interview.

 

[armor99]

Good point Ronstar! Being in the engineering profession, I have seen this one a lot. There are lot's of engineers here that have "lived in their heads" for so long that they have completely forgotten (if they ever learned at all) how to interact with other people. There are engineers here that come into work every day looking like they have not washed in a while, wearing the same shirt for a few days, caught one that started cursing in a meeting. Somehow I escaped this fate as I am a very outgoing personality, fairly eloquent speaker, and have VERY GOOD hygiene.
I can very clearly remember being in school and knowing other engineers that actually believed that getting a 4.0 average was their ticket to "the good life", and nothing else in their developement mattered. To the point that if they could only get a "B" in a class, they would drop it, and take the whole course over again. IMHO these people were completely dillusional and insane! A lot of them believed that they could get great jobs, at huge salaries, based only upon their book smarts. The reality is, that no matter where you work, or what you do, the inter-personal relationship factor is extremely important. Even if you are the smartest eningeer that ever was, if you cannot explain those ideas to anyone else, in a way they can understand, then you are fairly useless. I would think that would be true of almost any profession.

 

[barbarus]

Engineers are supposed to be dorks! Good God. Have we gotten so slick in our society that everyone has to have the unctious delivery of a used car salesman or politician? Engineers go in to engineering because they like to work with things rather than people. Does an employer really prefer a phony, studied actor who comes off like a pop psychologist (like I can if involves earning money)?

Seriously, most engineers/computer-dudes should stand mostly on their tech skills.

 

[Bikerdude]

Engineers are supposed to be dorks!

I agree, they are Dorks and they like it that way . Most people in that field and in computer science are introverts. That's just the way it is.

 

[megacorp-firee]

1st of all, I had a lot of VERY SMART ... bordering on brilliant, engineers, computer science majors, and even a PHD work for me. They are an absolutely necessary part of the team.

However, when it comes to running things and leadership, if you can't articulate your ideas, your ideas typically get lost in the noise and confusion of a typical business.

IMO, if you want to be part of the management team and run the business (i.e. move ahead), then you do have to be presentable, organized, articulate, and political (i.e. team player, smoozer, consensus builder, ...etc.), as well as ambitious. Being a 'one trick pony' limits yourself. A well rounded person is more valuable to him/herself and the organization. So the brilliant engineers who have these traits have a better chance of success.

My observations are that the people who drop classes because they are projecting a grade of B are anal retentive people (sorry for the generalization,.... hmmmm engineers) and are not really looking into the future thinking that they REQUIRE straight A's to get hired, more money, ...etc.

btw ERD50, love the anecdote

 

[mb]

I have BS and PhD degrees in engineering. I don't any engineers that dropped a class because they were getting a B . . . . . . . . . pre-meds on the other hand are a completely different story.

MB