What percentile are you for net worth for your age? (margin, puts)
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I disagree with their contention that N.W. needs to be multiples of gross income. It actually needs to be based on total estimated yearly expenses in retirement x 25 (for a standard 30 yr retirement).
98% at 37 with my wife's combined assets and liabilities; 95% if I cut our assets in half. Most of our assets is due to dumb luck of buying the cheapest REO house in Newport Beach in the fall of 2011. That and fully funding my 401(k) since I was 22 gave me a good start. BTW, I'm no stranger to the Frugal Living subforum....
People respond to incentives and to disincentives. Our current system has plenty, and collectively they do quite a bit of harm.
I think a better system is a Progressive Consumption Tax. It provides no disincentive to earn more. There are several ways to set one up - but here is an overly simple one:
a) Just like today, we fill out a tax form that indicates everything we earned (wages, dividends, interest, capital gains, rental income, etc. Everything. )
b) We then fill out on a tax form everything saved or invested, backed up by bank statements, brokerage statements and the like.
c) When you subtract savings/investment from earnings, the difference by definition is consumption. This is the thing you tax to raise revenue to fund the government.
The more you consume, the more tax you owe. The more you consume, the higher the tax rate you pay on consumption. If you're a multi-billionaire and you consume $50 Million per year, you will be taxed at a very high rate and you'll pay a lot of money in taxes. If you are a low-income person who consumes little (by comparison), you'll be taxed at a low rate and won't pay much in taxes (if anything). If you're so-called middle-class who makes a good income but saves quite a bit, you'll owe low taxes at a low rate; if instead you spend everything you make living paycheck-to-paycheck, you'll owe & pay more.
The advantage of such a system is in its incentives compared to the incentives of the current band-aid approach to income taxation.
The progressive consumption tax can be made as progressive as you like.
A lot of wealthy people can be rather cheap with their money though.... there's a reason many of them have money... plus how do you log what you consume? Do you have to track everything you buy all year long? Taxes should be made simpler, not more complex.
People respond to incentives and to disincentives. Our current system has plenty, and collectively they do quite a bit of harm.
I think a better system is a Progressive Consumption Tax. It provides no disincentive to earn more. There are several ways to set one up - but here is an overly simple one:
a) Just like today, we fill out a tax form that indicates everything we earned (wages, dividends, interest, capital gains, rental income, etc. Everything. )
b) We then fill out on a tax form everything saved or invested, backed up by bank statements, brokerage statements and the like.
c) When you subtract savings/investment from earnings, the difference by definition is consumption. This is the thing you tax to raise revenue to fund the government.
The more you consume, the more tax you owe. The more you consume, the higher the tax rate you pay on consumption. If you're a multi-billionaire and you consume $50 Million per year, you will be taxed at a very high rate and you'll pay a lot of money in taxes. If you are a low-income person who consumes little (by comparison), you'll be taxed at a low rate and won't pay much in taxes (if anything). If you're so-called middle-class who makes a good income but saves quite a bit, you'll owe low taxes at a low rate; if instead you spend everything you make living paycheck-to-paycheck, you'll owe & pay more.
The advantage of such a system is in its incentives compared to the incentives of the current band-aid approach to income taxation.
The progressive consumption tax can be made as progressive as you like.
I personally don't see what would change with your progressive consumption tax. The top 1 percent of earners already pay nearly 40 percent of the entire tax burden (see above link), whereas the bottom 50 percent only accounts for 2.7 percent of the total U.S. tax burden. The middle and upper middle class picks up the remaining 57 percent.
All I see is the people who already pay all of the taxes paying more than they already do. What's fair about taking somebody else's hard earned money away from them to make up for people that chose to not be as productive or responsible with their life choices?
Most wealthy people I know, worked very hard and sacrificed to become successful. They also fiercely drive the economy through their spending habits, too! Their wealth creates both jobs and opportunities for those not as well off.
I'd rather see a flat tax...then everybody contributes and pays their fair share!
Robin Hood was a fictional folklore character in England. Let's stop trying to make him real, here in the United States of America!
i would simply charge those who pay no income tax a minimum tax just for living in this country . almost 1/2 the filers pay no income tax . even 25 bucks wouldn't hurt . they all seem to have lots of money for i-phones and lottery tickets . but this is another discussion .
i would simply charge those who pay no income tax a minimum tax just for living in this country . almost 1/2 the filers pay no income tax . even 25 bucks wouldn't hurt . they all seem to have lots of money for i-phones and lottery tickets . but this is another discussion .
You and me both. Everyone should have some skin in the game.
Simple.. peg the capital gains tax rate to the income tax rate. This would also encourage wealthy people to stay invested because the less they cash out in any given year, the lower their effective tax rate on what they do sell. Going to cash in $4M in stock options? You're gonna have to pay. I think that's "fair." I would have also added a 50% bracket for income of more than $2M per year. Cover those sports athlete salaries among other things. I guess I'm not as capitalist free market as I thought.. but all evidence suggests wealth actually trickles up better than it trickles down. Combine that with the fact that people on the bottom don't spend money very wisely (feeding the big sports industrial complex for example) and I don't believe there's anything particularly bad about having a high effective tax rate for the wealthiest in society. The top rate during most of the industrial revolution was something like 75% or even as high as 90% which is a little known fact people often ignore. A look at this data shows shockingly high tax rates for many wealthy people during this time. People today often equate this kind of progressive tax structure as socialist but it can work just fine though in a globalist world you have to remain competitive with other countries and offer incentive to do business here so it's a balancing act which is why the corporate tax cut was needed in my opinion.
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