I have been thinking about where our government seems to be taking us -- higher taxes on higher incomes and more public spending. I do not like this path. However, I am a rational being, and I analyze the environment I am in to determine what is the best path forwards.
I have been thinking lately about what I would do if the above trend continues -- higher taxes on higher incomes and more public spending -- later in my life. In about 12 years my house will be paid for and my youngest child will have completed college. At that point I personally feel that most of my financial obligations towards others -- children, for example -- would have been satisfied. For the last 20-25 years I have been working in what may fairly be described as the "rat race." I have worked a lot of hours at work, I have spent a considerable amount of personal time studying to stay at the top of my profession, I have invested time to make a career transition to a new but related career. I have benefited from this deferral of gratification by substantially increased income over this time. To be specific, I've managed to maintain 10% compensation increases year-over-year from 1984 -- my first professional job -- until 2008. For those of you who may not be mathematically gifted, that is a 984% increase (1.1^24 is the math). That is pretty good for a working stiff, working for the man and not being in business for himself or being a partner having a share of the action. In my view, the changing taxation regime that impends threatens my game plan I have been following for 24 years. The last 20% of my work time -- is optional, and I get paid bonuses that incentivize me for this extra time -- are liable to suffer the most (that is be taxes fully at my highest tax rate) under an increasing tax regime. It gives me pause. It makes me want to stand back, analyze the system, and work up a new game plan. Sure, if I inherited stacks of money from daddy I'm not going to throw away the trust fund in order to decrease my income. But that is not my situation. I'm working for a living, I earn an extra dollar by working extra time. When 50% of that extra dollar is given up as tax, is it worth my time to work the extra time to earn it?
So with my house paid for, the kids college education completed, it occurs to me I might apply my time to greater personal satisfaction reading Proust in French, learning a new language (German), writing creative literature, and to hell with the high earning treadmill I've been on for 24 years. Is there a way to make the system pay me rather than for me to pay the system -- through confiscatory taxes? I don't know. But I'm smart. I'm good at math. I am very skilled at finding things out. With the changing healthcare regulations/laws, I might even find a way for my healthcare to be funded by the great Sugar Daddy in Washington DC, the US government, provided my income was small enough. It is just a matter of thinking the situations through and considering what works best for me.
I'm sure I'm not alone in making these calculations.
I'm sure I'm not alone in making these calculations.
No you're certainly not alone. I feel you've writen my life story. I'm not going to change my game plan though, not just yet. I'm striving to change the government here at my local level where I can be most effective. This allows others to move on to the national level.
As for business, it makes me sick to my stomach to hold off on plans for my next adventure. With such an agressive war on private companies and the American public, the risk/payoff ratio just isn't there right now. I have to believe the public won't get use to this war and fight back.
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John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
you certainly are not alone. In fact, people like you are the reason that the government's twisted logic doesn't work when it comes to revenue plans like "more taxes=more revenue"...and rightfully so.
"rich" people who are generally smart and financially astute will never trot peacefully while carrying the entire tax burden on their saddle, regardless of how much the govt and the entitlement portion of society would like them to. It would be nice if everybody would realize that.
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Looney tunes deductive reasoning:
--Me smell Mohican burning
--Me last Mohican
--Must be me!!!
--EEEOOOWWW!!!!!
You'll likely find, as I did when trying to get disability for my stepson, that "This would be easier if you weren't white."
My wife is from Oklahoma originally. She has some indian blood in her family. Maybe that is the ticket -- claim the entitlements through my wife's side of the family?
I challenged myself on this topic and debated briefly whether this is realistic or possible. My answer was to ask if there were other experiences with this situation. The answer was yes, some of the European states such as UK, France, etc. Continuing with this approach, do people within those systems "game the system" in a way similar to that I described? I think that this is indeed the case. If your needs are modest, as mine would be after having seen my children through college and having paid off my house, is it possible within some of these quasi-socialized economies to live off the dole? I believe yes.
It is so obvious that disincentivizing hard work and deferral of economic gratification is totally bone headed -- it diminishes and retards wealth creation, and wealth creation is the lifeblood of any economy. But what can you do? I play the cards that are dealt.
Twenty four years, I must say is about the halfway point for many that I work with. I do not have enough fingers to count the number that had worked thirty five to forty years and had managed to save nearly every dime in that time, to not live long enough to enjoy the fruits of their labors. Is the drive to amass sums a sickness or a product of a work ethic, or a combo of both, I do not know. After attending too many funerals, I do know that there is no value higher then that put upon family and freinds, and the good times spent with both. No one drops from the same mold, each have their own priorities in life and must make the call when to clear off their desks and go home. Tomorrow is always another day, when your on this side of the grass.
Did I have a brain fart or what? Sorry Alsatian. Yes, I've thought of a way to get everything free and stay living good. Invest a smaller portion of your money in taxable returns. Keep that low enough to remain under the tax thresholds. Take the rest of your money and invest in tax free bonds. When you file, your income level is below the federal tax levle and if you do it right, you can have them pay you for not working. You also have your tax free returns to support you during the year.
One other way that works for folks overseas, little iffy for you here in the states but you may pull it off. Just never vist US or it's territories. If you live outside the US and some other countries for more than a year, you're not required to pay federal taxes. (going by something some else stated about US tax laws) Buy a sailboat and live touring around the islands the rest of your life. If you have no address and never vist the US or it's territories, you're outside the US and shouldn't have to pay taxes. Not to mention great scenery.
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John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
Frightening. I do hope we repudiate this path and instead limit our tax burden on those who create wealth and stop the incessant class envy that some politicians delight in fomenting. To me it is abundantly clear that there is a limit to what government ought to spend. I'm sorry -- I know it is hard and painful -- but you are just going to have to eek out a thrifty existence, Uncle Sam, on your $800 B tax income per year!!!! I pulled this number out of the air -- I don't know what the tax revenues are -- but hopefully my point is appreciated.
There are more good causes that our government could spend money on that we could ever afford to pay for. It is the same way with family budgets. In our families we just have to live with less when the budget isn't there. At least speaking for myself, there have been many times there were good things my immediate family had to forgo because of insufficient funds. I have managed to survive as have my children this shocking self-denial.
Economic incentives and gaming the system
