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"The same thing can work when you leave the contribution phase of your life and move into the draw-down phase: Use your withdrawals to move your portfolio back into balance by selling from whatever category is the most dollars over its target."
Please explain how that maneuver is going to save you on your taxes?
Fed income 13%
Ss/med 7.65%
Real estate 3.4%
Sales tax 3.8%
That still leaves another 4000.00 available for other taxes not to mention my sales tax estimate is probably high. Estate taxes? Terrible example that impact very few people. Death taxes? Are you making things up now? Tolls aren't a tax either
Don't forget the employer's side of SS/Med is also 7.65% - while you don't directly pay it, the case can be made that if your employer didn't have to pay it, your salary would be higher.
How much higher? We can certainly conceive of a "labor cost elasticity coefficient":
LCEC = (pay increase)/(reduction in pre-raise employer's cost burden)
where "0" would be no effect, and "1" would be full effect, making you effectively "pay" the full 15.3% in combined SS/Med. taxes.
What is the actual coefficient? I think 0 and 1 are both implausible, it's somewhere in between. But where?
Don't forget the employer's side of SS/Med is also 7.65% - while you don't directly pay it, the case can be made that if your employer didn't have to pay it, your salary would be higher.
How much higher? We can certainly conceive of a "labor cost elasticity coefficient":
LCEC = (pay increase)/(reduction in pre-raise employer's cost burden)
where "0" would be no effect, and "1" would be full effect, making you effectively "pay" the full 15.3% in combined SS/Med. taxes.
What is the actual coefficient? I think 0 and 1 are both implausible, it's somewhere in between. But where?
Kinda like when they say with 0 corporate taxes prices would go down...
As long as you're willing to live frugally, I prefer this post: Never Pay Taxes Again.
You can avoid 100% of taxes once financially independent, if you live frugally.
What a misleading title! They mean income taxes, and the title should say so.
There is no way to avoid paying some sales taxes except in the few states that do not have a sales tax. Even where groceries are exempt, such as in California, how can someone avoid buying toothpaste, toilet paper, and the like? And how about clothing? One is supposed to get all one's clothing from a church give-away and never buy a single item of new clothing? What a bunch of bull.
And we all have to live somewhere, so we are all paying property taxes, either directly to the taxing agency or indirectly through the landlord via our rent payments.
[quote=Lowexpectations;36351522]What where the roads like in 1900? What about utilities? I could go on and on but maybe you would ignore all the other differences between 1900 and 2014
We pay less taxes here in the US than most other countries. However, most other countries have government paid health insurance and a lot more in social services offered to it's citizens than here in the US. If you were to add what we pay for health insurance, doctors and prescriptions, we would be right up there with the rest of them.
What we have cheap here in the US (compared to other industrial countries) is cheap housing and cheap electronics. But we have a MUCH larger poor, under educated population here in the US, which pays little in taxes, and the wealthy who pay very little in taxes, and large multinational corporations, that pay little to no taxes at all. It is middle America and small business that pay the bulk of the taxes. However, with the large multi national corporations playing the still legal inversion game, and the very wealthy doing the same, our government is currently starved for tax revenue. Never before has the government had so little in taxes collected in recent history. (% in relation to population and GDP)
So yes, if you consume less (smaller less expensive house, car, etc.) you can decrease not only your taxes, but your utilities, maintenance etc.
But taxes is not the problem here in the US. It is the large percentage of people and corporations not paying taxes. It is the lack of educational opportunity and on the job training that we used to have that is quickly eroding. It is the lack of spending that holds up back, which is due to low wages. Trickle down doesn't work. Decent incomes with disposable income is what creates jobs. I don't know about you, but I would rather have to pay more in taxes by having a larger income, than try and pay less taxes on a small income.
Don't forget the employer's side of SS/Med is also 7.65% - while you don't directly pay it, the case can be made that if your employer didn't have to pay it, your salary would be higher.
How much higher? We can certainly conceive of a "labor cost elasticity coefficient":
LCEC = (pay increase)/(reduction in pre-raise employer's cost burden)
where "0" would be no effect, and "1" would be full effect, making you effectively "pay" the full 15.3% in combined SS/Med. taxes.
What is the actual coefficient? I think 0 and 1 are both implausible, it's somewhere in between. But where?
So at a max it's 34% with an overestimation of sales tax? Further to the point the person I was responding to made reference to the fact that he didn't believe me and implied a lower income neither of which are true
This thread seems to have gone down a policy and math debate path, but getting back to the original post (although for what it's worth, a few years back I did the math on my effective tax rate and IIRC, it was hovering around 40%, definitely over 30% and I wasn't a particularly high earner at the time - but I owned a home in Chicago and state income tax had just gone up to 5%).
Some ways I've minimized taxes:
- Moved to a state with no income tax (the toll roads are somewhat pricey, but I feel better paying specifically for something I'm using than a flat income tax)
- I buy/trade a lot of stuff on online garage sale groups and/or Craigslist. I believe in many states you are technically supposed to be paying a "use tax" on that, but I don't know anyone who does. If you do, you're a great person, congrats.
- Same goes for buying online from companies without a presence in your state. I moved to a state with an Amazon facility, and I find myself shopping there less and on other sites more where there isn't an in-state presence.
- Buying a home well below our means and contesting the city tax assessment (this is a very common thing here, it wasn't in my last area, really just depends but everyone should at least know how it is calculated and if you feel yours is fair)
- Maximizing contributions to tax-deferred or tax-sheltered funds like HSA, 401k, Roth IRA, etc
- Charitable contributions, if one so desires. I don't just toss money in the can at Christmas, I plan out my giving and get the right documentation so it can be deducted
- I don't personally do this, but my state has a tax-free weekend for clothing and other "basics" up to $100, someone could shop on that weekend to save money
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