Poll: Future Tax Rates Will Be Higher

[Gone4Good]

I would think something has to give...and there are no easy/obvious choices.

That chart is a little out of date so I ran one with numbers up until 2015 (same source)

Also not sure why the original chart starts in 1950 (actually, I am) but if you start it in 1980 the trend looks much different.

 

[kcowan]

There are certain costs that are bound to go up:
- insurance for fire, flood, hurricanes, earthquakes
- cost of education at all levels
- cost of health maintenance
- cost of policing
- cost of maintaining infrastructure
- ...
Whether these are paid by increased fees or taxes is moot. It is our bottom line that counts. So unless there is massive economic growth, higher taxes/fees are inevitable.

 

[NW-Bound]

... Does anyone think future taxes on a given income will go lower?

At the very least I assume taxes will remain the same, though that seems highly unlikely IMO. Then it only remains how much higher taxes to plan for, that's the only unknowable IMO...

+1

If we are fortunate, taxes will stay the same. I do not see how it can go lower, at least for people like myself and posters here.

 

[samclem]

Why would Federal income tax levels increase? Don't we vote for congressmen/women, and they pass the tax laws?

Approx 45% of US citizens pay no net federal income taxes (2015 numbers). These people have no inherent personal interest in reducing federal tax rates, and to the degree they are recipients of payments from the federal government (ACA subsidies, block-granted assistance programs, etc) they may be incentivized to support higher taxes (if they won't be paying them and possibly receiving higher payouts as a result of these collections).

The top 20% of earners pay 85% of the personal income taxes collected in the US (they earn about 50% of the money). So, and this isn't about politics, it's just numbers, it's possible we increasingly have an electorate that may favor higher taxes because they aren't the ones paying them, or they pay relatively little, and may receive a personal benefit if higher federal outlays result. Kinda the opposite of what you've laid out.

Yes, the above treatment does not cover state income taxes, payroll taxes, excise taxes, dog licenses, etc.

 

[Hamlet]

For all the people who insist taxes will go up because they always have--

https://research.stlouisfed.org/fred2/series/FYFRGDA188S

The overall percent of GDP taken by the Feds in taxes has been pretty flat overall since WWII.

Therefore, I'm not expecting dramatic changes either way.

 

[Amethyst]

But the millennial generation is even bigger than the BB gen: Millennials overtake Baby Boomers as America’s largest generation | Pew Research Center

Won't that be helpful, eventually?

Y
-- Demographics: End of the baby boom = relatively fewer tax payers and relatively more recipients of government services.

 

[samclem]

But the millennial generation is even bigger than the BB gen: Millennials overtake Baby Boomers as America’s largest generation | Pew Research Center

Won't that be helpful, eventually?

The situation keeps getting worse, only more slowly that before. Still not great.

 

[Gone4Good]

Yes, the above treatment does not cover state income taxes, payroll taxes, excise taxes, dog licenses, etc.

Doesn't this admission completely invalidate everything written before it?

I assume the "dog licenses" reference was thrown in to indicated the unimportance of everything but individual income taxes. And yet income taxes account for less than half of federal revenue.

 

[surferLife]

The US seems to be following EUROPE when it comes to certain things, like healthcare and other laws. I just don't see how the US can continue to follow this model without also increasing taxes.


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[Options]

After carefully throwing my chicken bones, they're saying...saying...."All Circuits Are Busy. Please Try Again Later." Wait! I'm getting somethihng now: "Have You Considered Now's The Time to Go Back And Attend Our Advanced Chicken Bones Throwing Course?"

Damn, I hate these advertisements!

 

[samclem]

And yet income taxes account for less than half of federal revenue.

Income taxes account for 58% of federal revenue. Individual income taxes account for 47% of federal revenue. And payroll taxes paid jointly by employers and employees account for 38% of federal revenues (2015 numbers). Now, the discussion of that last component is interesting, particularly if we examine the relative benefit gained by those at various income levels from the taxes they (and their employers) pay, and the resultant inducements to favor increases in those programs. The subject of the thread is "will taxes go higher", and the support for increases in payroll taxes, especially if they will be paid by someone else, may be significant. But, we can escape those by retiring!

 

[Shanky]

National VAT. Only way to extract more tax from Roth IRA's

 

[Gone4Good]

National VAT. Only way to extract more tax from Roth IRA's

VAT is one one way. A carbon tax is another. A wealth tax is a third. Taxing Roth withdrawals directly is a fourth. Including Roth withdrawals as "income" for determining things like taxes on SS is a fifth. Using asset based means testing for government benefits is a sixth.

Lots of ways to skin a Roth.

 

[Shanky]

VAT is one one way. A carbon tax is another. A wealth tax is a third. Taxing Roth withdrawals directly is a fourth. Including Roth withdrawals as "income" for determining things like taxes on SS is a fifth. Using asset based means testing for government benefits is a sixth.

Lots of ways to skin a Roth.

Agreed. My cynicism was too narrow.

 

[2017ish]

VAT is one one way. A carbon tax is another. A wealth tax is a third. Taxing Roth withdrawals directly is a fourth. Including Roth withdrawals as "income" for determining things like taxes on SS is a fifth. Using asset based means testing for government benefits is a sixth.

Lots of ways to skin a Roth.

But, but, but.... Our elected representatives promised.

 

[RetireAge50]

One way to not get hit with future tax changes on wealth, Roth's, etc. is to spend the money (now).

 

[marko]

Yes it could get much worse. SS benefits and Medicare premimuns are already means tested as you probably know. Depending on how much earned income you have, up to 85% of your SS benefits are taxed. Have to much total income and your Medicare monthly premiums can double, triple or more. What's next.

What's next is a whole new industry of hiding wealth for the LBYM crowd as I see a move toward your NW, not just your income being means tested and taxed. $1.5MM in investments? No SS or Medicare for you, just higher taxes based on your NW!

Of course, new and clever ways to straight-arm the taxman will surface as well.

I've often mentioned on this forum how the wealthy have resources to remain unaffected.

 

[Fedup]

Mine will be lower so far, but I think eventually it might tick up. But certainly my husband and I paid the highest tax back in 2000 time frame.

 

[HFWR]

I plan to avoid future tax surprises by actually being broke...

 

[traineeinvestor]

For the two places which are most relevant to me, it's more likely that taxes will fall than rise in the near future. Both Hong Kong and New Zealand are running surpluses at the moment - for Hong Kong, I'm hoping for another quarter of rates concessions (basically a reduction in property taxes) and for New Zealand a reduction in income tax rates as an election bribe ahead of next year's election.

For the less significant ones I'm expecting increases that may affect me in the UK and US and no net change in China and Australia.

All that being said, my budget included an allowance for general increases in living costs which includes taxation.

 

[EastWest Gal]

Just curious, since Hong Kong is now part of P.R.C., how does a city generate a tax surplus that doesn't just go into the national government's coffers? How does a city run a tax surplus?


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[Car-Guy]

What's next is a whole new industry of hiding wealth for the LBYM crowd as I see a move toward your NW, not just your income being means tested and taxed. $1.5MM in investments? No SS or Medicare for you, just higher taxes based on your NW!

I fully agree with that, however, I do think that the means testing NW target will "start out" higher than $1.5m and then be phased or graduated down.

Of course, new and clever ways to straight-arm the taxman will surface as well.

And they will closed those "ways" as fast as we can find them.

I've often mentioned on this forum how the wealthy have resources to remain unaffected.

Maybe, but I think you might need significantly more than most on this forum (based on some recent polls I've seen) to really remain unaffected.

 

[Car-Guy]

But, but, but.... Our elected representatives promised.

This should be posted in the "it's funny joke Thursday" thread. Sad but so true.

 

[Koolau]

As long as votes can still be bought with "free" stuff, taxes on those still willing to w*rk must go up. I DO look for a VAT type tax with the "promise" that income tax will be lowered. Of course, once the new tax is added, there's nothing to hold office-holders to their empty promises. If this sounds "political", it's not. It just cynical which is what I am when it comes to our current (and future) situation. Of course, I could be wrong. I was once, so YMMV.

 

[kcowan]

Of course, new and clever ways to straight-arm the taxman will surface as well.

I've often mentioned on this forum how the wealthy have resources to remain unaffected.

One way to not get hit with future tax changes on wealth, Roth's, etc. is to spend the money (now).

National VAT. Only way to extract more tax from Roth IRA's

...the new tax is added, there's nothing to hold office-holders to their empty promises. If this sounds "political", it's not. It just cynical which is what I am when it comes to our current (and future) situation. Of course, I could be wrong. I was once, so YMMV.

Take a lesson from our neighbors to the south. They buy houses and condos. They do not trust banks. They rent them out and do not declare the income. They buy stuff for cash and avoid the VAT.

It is tax anarchy because the government is not trusted. The real estate industry does not report sales to the government except to capture capital gains. So if you buy and hold, you are fine.

We can learn a lot from the Mexicans!

(Did I mention that I own property there? 95% of the owners do not declare rental income.)