Class warfare and FIRE?

[nun]

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.

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.

 

[HFWR]

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...

I just recognize and accept that almost no one is paying the least bit of attention to my existence much less giving a care.

+1

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.

"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...

 

[eytonxav]

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.

 

[eridanus]

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.

 

[W2R]

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

 

[nun]

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.

 

[Midpack]

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...

 

[Midpack]

Maybe we can increase our net worth targets beyond FIRE, to achieve TBTFRE status and mitigate any downside risk.













Too big to fail...

 

[HFWR]

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?

 

[eytonxav]

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.

 

[Nords]

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.

 

[M Paquette]

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.

 

[Gatordoc50]

The interest rate environment rewards debtors and hurts savers. In that sense, those who saved are already being penalized.

 

[Alan]

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.

 

[eridanus]

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.

 

[nun]

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 a small correction from my POV. I'm proud to be a socialist. People who are socialists have no problem with other people describing me that way too.

 

[SpencerM]

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.

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.

Ziggy29, Interesting that you would find the term 'class warfare' to be 'incendiary and cheap', it seems simply to be the truth.

From Wikipedia:
Class war or class warfare refers to a class conflict, or tensions between members of different social classes

Clearly those who complain about the 'rich' to achieve political gain intend to foment such conflict. If you consider that incendiary than I suppose the term 'rich' must also be so?

I think there may be a strong temptation to 'access' the thus far tax protected retirement accounts, perhaps indirectly perhaps directly via tax law changes. I already hear the cry to eliminate SS for those who 'don't need it' so I would not agree that those without high earned income would be safe.

It is good to get everyones thoughts...

SM

 

[Bimmerbill]

I worry about the same thing as OP.
I already feel targeted due to my federal pension.

 

[Ed_The_Gypsy]

The rich can ably defend themselves. The middle class cannot. When the shooting starts, I am going to join the mob.

 

[SpencerM]

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.

Nords, just trying to have a serious conversation here.

If you look at the retirement demographics and overlay the percentage that will be self-sufficient after the bulk of the boomers retire, I think you will see the issue. True they will not have money to influence politicians, but they will have huge numbers of VOTES.
No conspiracy, but sometimes demographics can reach up and bite you.

SM

 

[pb4uski]

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.

I agree with allowing some minimal amount of liquid assets to be retained, the use of the term "exhausted" was a misstatement on my part, but the post I was responding to seemed to suggest that it was ok to transfer parental wealth to children to become eligible for Medicaid LTC benefits.

I would not agree that real estate should be excluded - why should the heirs get property if the government has been providing LTC for the parents? I think the real estate could be sold and the proceeds used to provide for the parent's LTC until those funds are down to some minimal amount or alternatively, to the extent that Medicaid provides LTC because there are no more liquid assets then Medicaid has a lien on the property that must later be satisfied before the heirs get any proceeds from the sale of the property.

While I agree with the live in dignity part, if the parent's are supported by the state then why do the children deserve the proceeds from the sale of the property? Whatever they get is coming out of our collective pockets. In a situation like that the whatever is left of the liquid assets that were retained (the 10k in your example) would go to the children plus any proceeds from the sale of the property in excess of the amount paid by Medicaid for the parent's LTC.

 

[eridanus]

Clearly those who complain about the 'rich' to achieve political gain intend to foment such conflict. If you consider that incendiary than I suppose the term 'rich' must also be so?

Likewise, clearly those who complain about the 'poor' to achieve political gain intend to foment such conflict. If you consider that incendiary than I suppose the term 'poor' must also be so?

 

[ls99]

OK, so both "rich" and "poor" are four letter words. Now what?

 

[eridanus]

OK, so both "rich" and "poor" are four letter words. Now what?

We go back to the real problem. We raise taxes, reduce spending, or do a little of both. This likely means that FI will become harder and social benefits will decrease.

Really, though, both sides will glare at each other until the entire house of cards falls.

 

[marko]

I think eridanus is spot-on. Most of us have found ways to stay under the radar. As my accountant once told me "the trick is to look like one of 'them' while being one of 'us'.."

At the same time 'Means Testing' has to be two of the most terrifying words in the FIRE world!

My take: the have-nots have been demanding their 'fair share' from the haves since the stone age; I don't see anything changing much...in fact, we only have to worry about the next 20-30 years and then who cares?