Wednesday, July 27, 2011

Taxing Efforts

One thing I miss about IJAB is that we'd get some of the crazies out of the woodwork, and commenting on all sorts of interesting things. Happily, Westy's Facebook page allows for some of the good stuff to come through. Here's the latest:


Sure, it seems like an innocent enough question. Then people start spitting out factoids.

I suppose that seeing these responses that took random facts, implying that they created an argument, made me annoyed enough to post this goodie, which I've used w/ my man OD from time to time.

Did you know that 1% of the people pay 214% of the taxes in America?
Did you know that dogs and bees can smell fear?

Being rich, I totally agree that the rich should be taxed less.

And just today, I took a little field trip over to the HR offices. And I learned how being rich is even more awesome for taxes than I thought. It turns out that just about everyone can stash $16.5K, pre-tax, into a retirement account (401k, 403b, etc.). And you can actually tuck away another $16.5K as deferred payment, if you work for a state, gov't, or tax exempt organization (this is a 457b account). Essentially, I'm taking money out, untaxed, and leaving it in some account where I can invest it (returning about 17% last year, and so far about 6% this year) in a variety of mutual funds.

So, if you take this $33K, plus my 6.5% mandatory contribution (plus 6.5% employer match), you're looking at roughly $48K every year that I'm adding to my personal accounts, without paying a dime in taxes. So that's totally awesome.

And even more awesome, this sends me back into a lower tax bracket, and probably gets me to qualify for a Roth IRA (which is another sweet deal, totally worth the $5K post-tax). And the really awesome part is that I can draw from this money, without paying taxes on it, so long as I pay it back (with minimal interest) within 3 years. So it's not like I'm even missing the money.

Now, you're saying, "Chairman (or Param, as I'm now known on Facebook), everyone has those benefits. It's not just you, and it's not just for the rich." Which is true. But who out there can take $42K out of their paycheck, and put $5K into a Roth IRA, and not blink? Certainly not people who make less then $47K. Based on strictly anecdotal evidence, beyond $25K is where people can realistically save more than a couple hundred bucks a month, provided that you're not into things like living in a great apartment, having a great car, etc. Below that, you're probably living paycheck to paycheck. But to stash $47K? That still requires a salary of $72K to be able to pull this off. And if you're supporting some stay-at-home wife (or other low income spouses, like social workers or teachers) and/or, heaven forbid, kids? Yeah. You're probably not going to be able to pull off this magic.

So what percentage of the US makes enough to actually take advantage of these benefits? Well, the typical U.S. household is about 2.6 people. It's not quite an apples-to-apples comparison, but if you multiply $25K by 2.6, you get something like $65K, where a household of 2.6 people can really start saving money. That number seems a bit high, so we'll ballpark discount it by 20%, and call it $52K or so where a household can start legitimately saving. The median household makes roughly $44,400. And only about 45% of the households in this country make $52K.

So, really only about 45% of the households in this country are saving anything. And if the typical household wants to take advantage of $47K worth of tax benefits, you're looking more like $100K (which is conservative, since household size increases with income such that when you get to $100K, you're typical household size is 3.33 people). So, it's fairly conservative to say that only 15% of the households in this country can pull the sort of tax break that I'm able to pull off. And we're just talking about direct tax shelters for income.


Why am I against taxing the rich? I'm rich. I'm going to get richer. It isn't rocket science.

And when you're rich, you get to do all sorts of other things that help out your tax situation. When you get into things like tax benefits for mortgage interest, depreciating rental properties, etc., then the numbers get even more ridiculous. Basically, the story is that I can make $100K, and be taxed, as though I were only making $40K (or less, if I'm doing it right). And that, to put it plainly, is awesome.

So, what I'm saying is that I'm all for keeping the tax code the same (or cutting taxes on the top 10%, so that it will trickle down).


I'm not saying that I'm pissing on the poor. It's just that sometimes I don't pay attention, and go wide right.

Statistically speaking, there's a good chance that you make less than me. And statistically speaking, there's a very good chance that I'm paying a lower effective tax rate than you, and there's probably a pretty good chance that I've paid less in taxes altogether, particularly if you're one of those suckers who makes enough to get taxed well, but not enough to take advantage of the tax benefits (basically between $30K and $60K if you're a single person, and up to $100K if you're a "household"). So, drum up the troops on Facebook. I like being rich, and if you get the taxes going in my direction, like you have been, then I'm going to like being even richer.

-Chairman

Tuesday, July 05, 2011

Casey Anthony

Amazingly, it appears that Casey Anthony will be trying out for the Baltimore Ravens...

Making the news is always a good time. And I don't just mean that public indecency charge.

I think that she can make it. She's got that killer instinct that teams are looking for.

-Chairman