Hope you didn't really want to be rich!

You didn't really want to get rich, did you?

We just received a long letter from our tax planner going over all of the Federal & State tax increases.  Some of the Federal increases are contingent upon what happens with the "Bush Tax Cuts".  Others, however,  mostly associated with ObamaCare,  are certain.   Then comes the Prop. 30 increases on the State level.  

I could go over all of these MASSIVE tax increases by number,  but I don't think many of us really pay all that much attention (as evidenced by the voting).   So let's suffice it to say this:

If you were kind of rich... you won't be much longer.

If you hoped to be rich....forget about it. 

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Douglas Home November 20, 2012 at 04:35 PM
I created an Excel spreadsheet that calculated a typical life similar to most working Americans. It figured in Social Security payroll deductions plus employer contributions starting in 1975 and then assumed that they were privately invested. The results are shocking and the truth irrefutable (except to 2nd Gen I'm sure) At a 6% annual ROR you would have over $1 million in the account within 30 years. Anybody look at their SS account statement recently? Amazing what little happens when government has your money, isn't it?
Fritz 'Congodog' Stoop November 20, 2012 at 11:34 PM
Chris Nicholson November 21, 2012 at 12:29 AM
Fritz: why the exasperation around the 6% number? Over a ~40 year working career I think long-term real returns in equities have beaten that benchmark so even after blending in more fixed income for the last decade, 6% seems reasonable. Most pension plans use 7.5-8.5% assumption for nominal returns (not adjusted for inflation), so 6% seems OK, if perhaps not conservative NOW for shorter (0-10 year) horizons. Another irony of the "Robin Hood" approach i that when you target any policy objective other than GDP growth, all boats are lowered. Risk taking behavior in pursuit of growth (and after-tax returns) is what drives investment returns. If we make a series of policy decisions that lowers long-term real returns from say 6% to say 4%, think how much worse off we'll all be in 40 years...
Eastofthehills November 21, 2012 at 01:35 AM
As much as I hate to say it votes should be treated like shares in a company; your voting power should be proportional to your tax dollars paid. i.e. $1 paid to the gov't = 1 "share" The problem with our current system now is that too many of the mis-alignment of stakeholders. It's really easy for 10 people contributing nothing to gang up on one guy paying for it all.... especially when it's one vote one person.
Douglas Home November 21, 2012 at 02:55 AM
That's right, Chris, 6% was just a conservative annualized return for case of argument. If average return on the DOW, for instance, over same time period were used - that individual would be far "richer" in 30 years. In short, if we all would just rat hole at least 10% of every dollar we ever made, and buy even T-bills with it....we'd all be "rich" by 40 and wouldn't give the same rat's arse about Social Security. Still wouldn't change the fact that we can't trust government with our money.


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