" so really everyone in Idaho is essentially on government welfare"
lol, you say that and then reply I am emotional and talk about flawed logic?
Seriously, can you answer why you are unwilling to return the courtesy of auto-determination at the state level?
Income Equality -- Three Models
@ secretwealth
"they have about as stark a difference in welfare and social spending as is possible in the United States."
Yes, but that range is very narrow and quite irrelevant when looking at a global scale.
"My point was/is, libertarian social ideals don't lead to streets filled with beggars (or sex workers!)."
Except Idaho is far from the libertarian paradise you think it is, as its status as a net recipient of federal aid demostrates.
I'd like to suggest your point of view is far too provincial; the world is much bigger than the U.S., and looking abroad gives us better examples of much more liberatarian places (Thailand, Philippines, Somalia) and much more liberal (in the American sense of the word) places (Scandinavia).
Limiting yourself arbitrarily to one nation where everyone is a welfare recipient skews the results. FInland has 150 homeless people and is casually referred to as a socialist state. Thailand is a place where you can get away with killing people if you have enough money and has zero social welfare. They're much better real-world examples of liberalism and libertarianism than Berkeley and Boise, and completely contradict your point of view."
I have flown almost a million miles, I have been to about 25 countries including most of the countries you just mentioned- Philippines (in total I've spent ~2mos there), Thailand, Denmark, Sweden and Finland. I've certainly demonstrated intimate knowledge of Singapore and their system right in this thread, and it's not from reading something online. I've spent well over a year in overseas locations of widely disparate income levels and income systems. I've also spent time in every US state except North Dakota and South Carolina. Please, dispense with the small minded bullshit.
I limit the discussion to the US for a VERY simple reason. Everyone can relate. There are direct statistical data widely available comparing welfare spending in Idaho vs California. There are not difficulties in currency exchange or differences in how people are paid or report income. I've lived in both places and am intimately familiar with both, the differences are shocking.
The numbers I gave you on spend on social service per person inclusive of all federal monies a state might receive. So, that stat isn't really relevant when we are discussing welfare culture.
There are several excellent reasons in the comments of your link on state takers and makers why that is a silly comparison. There are several things specific to Idaho not mentioned, but why would I bother to list them?
We personally pay well over 40% of income to taxes. That would've gone up quite substantially in 2013 had we not made changes. Most of that is to the federal government. The citizens of this nation, are so thankful and grateful for our contributions of us top earners they are demonizing us as crooks and cheats, government money scammers and as not paying our fair share. I could whine or be mad. And have. To what purpose? Instead, we've decided to move to a place where the prevailing culture is one of self reliance and where they don't tend to look at the pocket books of others as the way to wealth. We'll simply get FI and continue toward earning our livings in a different manner that yields a higher standard of living yet allows us to keep from working until June to keep any of our money. We came to Harry Browne's conclusions before I read his book. (which was just this month after moving to Idaho)
I'll leave it to the high tax advocates to wonder what in the hell happened to all that money we were sending them and they were counting on receiving for at least 30 more years in their projections...I also leave it to them to tell me what happens to the people our taxes were supporting...
"they have about as stark a difference in welfare and social spending as is possible in the United States."
Yes, but that range is very narrow and quite irrelevant when looking at a global scale.
"My point was/is, libertarian social ideals don't lead to streets filled with beggars (or sex workers!)."
Except Idaho is far from the libertarian paradise you think it is, as its status as a net recipient of federal aid demostrates.
I'd like to suggest your point of view is far too provincial; the world is much bigger than the U.S., and looking abroad gives us better examples of much more liberatarian places (Thailand, Philippines, Somalia) and much more liberal (in the American sense of the word) places (Scandinavia).
Limiting yourself arbitrarily to one nation where everyone is a welfare recipient skews the results. FInland has 150 homeless people and is casually referred to as a socialist state. Thailand is a place where you can get away with killing people if you have enough money and has zero social welfare. They're much better real-world examples of liberalism and libertarianism than Berkeley and Boise, and completely contradict your point of view."
I have flown almost a million miles, I have been to about 25 countries including most of the countries you just mentioned- Philippines (in total I've spent ~2mos there), Thailand, Denmark, Sweden and Finland. I've certainly demonstrated intimate knowledge of Singapore and their system right in this thread, and it's not from reading something online. I've spent well over a year in overseas locations of widely disparate income levels and income systems. I've also spent time in every US state except North Dakota and South Carolina. Please, dispense with the small minded bullshit.
I limit the discussion to the US for a VERY simple reason. Everyone can relate. There are direct statistical data widely available comparing welfare spending in Idaho vs California. There are not difficulties in currency exchange or differences in how people are paid or report income. I've lived in both places and am intimately familiar with both, the differences are shocking.
The numbers I gave you on spend on social service per person inclusive of all federal monies a state might receive. So, that stat isn't really relevant when we are discussing welfare culture.
There are several excellent reasons in the comments of your link on state takers and makers why that is a silly comparison. There are several things specific to Idaho not mentioned, but why would I bother to list them?
We personally pay well over 40% of income to taxes. That would've gone up quite substantially in 2013 had we not made changes. Most of that is to the federal government. The citizens of this nation, are so thankful and grateful for our contributions of us top earners they are demonizing us as crooks and cheats, government money scammers and as not paying our fair share. I could whine or be mad. And have. To what purpose? Instead, we've decided to move to a place where the prevailing culture is one of self reliance and where they don't tend to look at the pocket books of others as the way to wealth. We'll simply get FI and continue toward earning our livings in a different manner that yields a higher standard of living yet allows us to keep from working until June to keep any of our money. We came to Harry Browne's conclusions before I read his book. (which was just this month after moving to Idaho)
I'll leave it to the high tax advocates to wonder what in the hell happened to all that money we were sending them and they were counting on receiving for at least 30 more years in their projections...I also leave it to them to tell me what happens to the people our taxes were supporting...
@ secretwealth-
"I'd like to suggest your point of view is far too provincial; the world is much bigger than the U.S., and looking abroad gives us better examples of much more liberatarian places (Thailand, Philippines, Somalia) and much more liberal (in the American sense of the word) places (Scandinavia)."
OK, let me hit you with some provincial knowledge. On average, it takes over a year to close after selling a home in the Philippines. I happen to know from friends it is a byzantine process too. I sold my house in California in 4 days and had cash in pocket 3 weeks later. It was simple.
In the Philippines, foreigners (a concept that does not even exist in libertarianism) are not allowed to purchase property. The process is filled with fees, bribes and tons of bureaucracy.
from this link:
"The process of buying land in the Philippines is cumbersome and tedious. Aside from the fact that foreigners are not allowed to buy land, the system of land registration and classification should make any investor think twice. The farther you are from the capital the more caution one must take.
However, serious land problems also exist in the NCR. There are 11 laws directly related to land registration and nine others indirectly related to land disposition and administration. Aside from the Department of Environment and Natural Resources and the Bureau of Lands, there are several agencies that have direct and indirect control over land. The courts also have the authority to award land ownership. "
http://www.globalpropertyguide.com/Asia ... ying-Guide
Is that your definition of how things would work in a libertarian country? That is more libertarian than the US?
You really should quit calling places like Thailand and the Philippines libertarian...it's quite a tell.
"I'd like to suggest your point of view is far too provincial; the world is much bigger than the U.S., and looking abroad gives us better examples of much more liberatarian places (Thailand, Philippines, Somalia) and much more liberal (in the American sense of the word) places (Scandinavia)."
OK, let me hit you with some provincial knowledge. On average, it takes over a year to close after selling a home in the Philippines. I happen to know from friends it is a byzantine process too. I sold my house in California in 4 days and had cash in pocket 3 weeks later. It was simple.
In the Philippines, foreigners (a concept that does not even exist in libertarianism) are not allowed to purchase property. The process is filled with fees, bribes and tons of bureaucracy.
from this link:
"The process of buying land in the Philippines is cumbersome and tedious. Aside from the fact that foreigners are not allowed to buy land, the system of land registration and classification should make any investor think twice. The farther you are from the capital the more caution one must take.
However, serious land problems also exist in the NCR. There are 11 laws directly related to land registration and nine others indirectly related to land disposition and administration. Aside from the Department of Environment and Natural Resources and the Bureau of Lands, there are several agencies that have direct and indirect control over land. The courts also have the authority to award land ownership. "
http://www.globalpropertyguide.com/Asia ... ying-Guide
Is that your definition of how things would work in a libertarian country? That is more libertarian than the US?
You really should quit calling places like Thailand and the Philippines libertarian...it's quite a tell.
@Seneca: I am glad we're neighbors 
and more like minded people are bringing their incomes, businesses, ideas and resolve every day!
foot voting, ftw.
"1. The nine states with no personal income taxes gained $146 billion.
2. The nine states with the highest personal income taxes lost $107 billion.
3. The 10 states with the lowest per capita state tax burden gained $70 billion.
4. The 10 states with the highest per capita state tax burden lost $139 billion."
source:
http://www.aei-ideas.org/2013/02/states ... migration/
and more like minded people are bringing their incomes, businesses, ideas and resolve every day!foot voting, ftw.
"1. The nine states with no personal income taxes gained $146 billion.
2. The nine states with the highest personal income taxes lost $107 billion.
3. The 10 states with the lowest per capita state tax burden gained $70 billion.
4. The 10 states with the highest per capita state tax burden lost $139 billion."
source:
http://www.aei-ideas.org/2013/02/states ... migration/
@Seneca
I seem to have missed a whole lot of discussion since I asked my original question but I wanted to thank you for the additional information and the link.
Personally I could get behind the idea of combining a hard bottom with the government acting as an employer of last resort. Without that second half, a hard bottom would entail far more human suffering (in many cases simply as a result of being unlucky not lazy) than I could stomach.
I seem to have missed a whole lot of discussion since I asked my original question but I wanted to thank you for the additional information and the link.
Personally I could get behind the idea of combining a hard bottom with the government acting as an employer of last resort. Without that second half, a hard bottom would entail far more human suffering (in many cases simply as a result of being unlucky not lazy) than I could stomach.
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Riggerjack
- Posts: 3191
- Joined: Thu Jul 14, 2011 3:09 am
@ Seneca
"We personally pay well over 40% of income to taxes. That would've gone up quite substantially in 2013 had we not made changes."
I'm glad you found better advice/advisors. If you were paying that much, I'd say you need to get better advice and/or plan better. But as you note, simply moving sometimes can help.
"We personally pay well over 40% of income to taxes. That would've gone up quite substantially in 2013 had we not made changes."
I'm glad you found better advice/advisors. If you were paying that much, I'd say you need to get better advice and/or plan better. But as you note, simply moving sometimes can help.
Thanks gents, obviously a subject of some passion to me.
@ Dragline and JohnnyH- To clarify, I include the payroll taxes in my percentage, as well as fed and state income. Basically our take home is 60% of gross, or really close before the latest round of tax hikes hit.
Simple Pareto principle, this is our biggest expense so deserves the most attention. We've spent money on experts, and think about it a lot, and the tax price of a high income is inflating at a rate faster than anything else in the market.
My wife and I are straight employees, there's just not much room within that. I did them myself, and then let a well regarded preparer do them a few years ago and he always does better than I. We itemize and all that.
After the move- we make less (but have more free cash!), we have lower state income tax, my employment is now formally work from home so I can easily deduct the office etc.
Bringing this back to income inequality.
There's a lot of research out there that people respond to/internalize their top marginal tax rate. Both MMM and Jacob (IIRC)have talked about 50%+ income tax rates as a disincentive, and they are. They also have a math problem people with the prevailing attitude of this site should understand really well. Most frugality sites/books will encourage you to work out your effective hourly rate. As your tax goes up that rate plummets. At a 50% top marginal tax rate, you have to earn $2 to get back every extra dollar you lose to new taxes. It also gets really interesting to look at how many hours you have to work to buy something when everything you are looking at has effectively doubled in price.
When dual income households decide to have children and are paying tax like that, it starts getting really hard to choose to stay in the workforce, and naturally more will choose to leave work or make other plans. (Like move to Idaho!)
There are many reasons I think this tax the high earners concept to improve income/wealth inequality is so fatally flawed. You'll lose high earners, high earner income tends to be very volatile naturally (CA struggles mightily with this in their budget) so relying on financing services from this is difficult. My biggest problem is, you aren't helping the people you want to help when you do this. You actually encourage high earners like me to become wealthy and get increasing amounts of income from lower taxed passive streams, and encourage lower earners to rely more on the government...which of course, makes the wealthy wealthier and the not wealthy less so.
Enough bloviating, I have to go prepare for a meeting.
@ Dragline and JohnnyH- To clarify, I include the payroll taxes in my percentage, as well as fed and state income. Basically our take home is 60% of gross, or really close before the latest round of tax hikes hit.
Simple Pareto principle, this is our biggest expense so deserves the most attention. We've spent money on experts, and think about it a lot, and the tax price of a high income is inflating at a rate faster than anything else in the market.
My wife and I are straight employees, there's just not much room within that. I did them myself, and then let a well regarded preparer do them a few years ago and he always does better than I. We itemize and all that.
After the move- we make less (but have more free cash!), we have lower state income tax, my employment is now formally work from home so I can easily deduct the office etc.
Bringing this back to income inequality.
There's a lot of research out there that people respond to/internalize their top marginal tax rate. Both MMM and Jacob (IIRC)have talked about 50%+ income tax rates as a disincentive, and they are. They also have a math problem people with the prevailing attitude of this site should understand really well. Most frugality sites/books will encourage you to work out your effective hourly rate. As your tax goes up that rate plummets. At a 50% top marginal tax rate, you have to earn $2 to get back every extra dollar you lose to new taxes. It also gets really interesting to look at how many hours you have to work to buy something when everything you are looking at has effectively doubled in price.
When dual income households decide to have children and are paying tax like that, it starts getting really hard to choose to stay in the workforce, and naturally more will choose to leave work or make other plans. (Like move to Idaho!)
There are many reasons I think this tax the high earners concept to improve income/wealth inequality is so fatally flawed. You'll lose high earners, high earner income tends to be very volatile naturally (CA struggles mightily with this in their budget) so relying on financing services from this is difficult. My biggest problem is, you aren't helping the people you want to help when you do this. You actually encourage high earners like me to become wealthy and get increasing amounts of income from lower taxed passive streams, and encourage lower earners to rely more on the government...which of course, makes the wealthy wealthier and the not wealthy less so.
Enough bloviating, I have to go prepare for a meeting.
Your description illustrates why earned income for working a job is the least attractive form of income from a tax perspective (and others). Dividend income and capital gains are easy to tax-manage and not subject to payroll taxes.
But you also need to have a serious talk with your employer or partners about their retirement vehicles (or lack thereof). Properly structured, high earners can shelter up to $100K in income in 401(k) and pension-like vehicles.
Our tax code is designed so that only the little people and the uninformed have to pay full freight. That's why payroll cuts off at about $106K. While we can gripe about that until we are blue in the face, the better course of action is to take advantage of what is offered as best you can -- and find out why your employer doesn't if they don't.
But you also need to have a serious talk with your employer or partners about their retirement vehicles (or lack thereof). Properly structured, high earners can shelter up to $100K in income in 401(k) and pension-like vehicles.
Our tax code is designed so that only the little people and the uninformed have to pay full freight. That's why payroll cuts off at about $106K. While we can gripe about that until we are blue in the face, the better course of action is to take advantage of what is offered as best you can -- and find out why your employer doesn't if they don't.
@ Dragline Maybe I should've hired you. How in the hell are you putting $100k/yr into 401(k) (and the like) accts?!
I hope I'm missing something; our 401ks are limited to $17,500/yr ea for 2013. Most of the traditional tax advantaged IRAs and college savings stuff all has income limits. Maybe I'll go do a journal post and if you have a minute you could describe what you mean?
I couldn't agree more with what you're saying on how the system is designed. Kiyosaki in Rich Dad/Poor Dad* does a pretty good job describing how when populism gets going and politicians start stomping their feet about inequality to sell higher taxes on the evil rich, it's the middle class who pays.
I like this piece by Arthur Laffer, some good observations on historically what happens with tax rates and what the tax the rich politicians do when nobody is looking too-
http://online.wsj.com/article/SB1000142 ... 74598.html
*Kiyosaki is a bit of a shyster, but I think that book goes through this stuff pretty good in 3rd grade english...
I hope I'm missing something; our 401ks are limited to $17,500/yr ea for 2013. Most of the traditional tax advantaged IRAs and college savings stuff all has income limits. Maybe I'll go do a journal post and if you have a minute you could describe what you mean?
I couldn't agree more with what you're saying on how the system is designed. Kiyosaki in Rich Dad/Poor Dad* does a pretty good job describing how when populism gets going and politicians start stomping their feet about inequality to sell higher taxes on the evil rich, it's the middle class who pays.
I like this piece by Arthur Laffer, some good observations on historically what happens with tax rates and what the tax the rich politicians do when nobody is looking too-
http://online.wsj.com/article/SB1000142 ... 74598.html
*Kiyosaki is a bit of a shyster, but I think that book goes through this stuff pretty good in 3rd grade english...
The limit on 401(k)s themselves is not 17,500, but nearly $50K. See http://www.dol.gov/ebsa/publications/401kplans.html at "Contribution Limits". But it has to be structured so the employer is depositing the lion share. You are correct that as an individual, your personal elected deferral is limited to $17.5K.
An employer can also set up a separate pension plan (sorry don't have the cite for this one), whereby additional money that would otherwise be income, based on formulas that account for income and age, is deposited into a pool that can be managed for all contributors and invested in stocks, bonds or whatever. When you leave employment, you get your pro rata share of it and can roll it into an IRA, etc.
Another place to shelter a few K is an HSA attached to a high deductible health plan.
As for the whole "effect of taxes" debate, I'll take a pass, simply because I can find you reams of articles on either side with their favorite pet theories and cherry-picked statistics, which means that it's just a political/philosophical debate about fairness and morality with numbers attached.
As Yogi Berra said, "In theory there is no difference between theory and practice. In practice there is." And in practice, the outcomes are uncertain and dominated by other variables.
It would be more honest if everyone would stop pretending they can predict the future of the whole economy based on the tax code and simply said "The tax code is fair/unfair to [group], because of[reason], and therefore is should be [changed/kept the same]." The rest of it is just window dressing.
An employer can also set up a separate pension plan (sorry don't have the cite for this one), whereby additional money that would otherwise be income, based on formulas that account for income and age, is deposited into a pool that can be managed for all contributors and invested in stocks, bonds or whatever. When you leave employment, you get your pro rata share of it and can roll it into an IRA, etc.
Another place to shelter a few K is an HSA attached to a high deductible health plan.
As for the whole "effect of taxes" debate, I'll take a pass, simply because I can find you reams of articles on either side with their favorite pet theories and cherry-picked statistics, which means that it's just a political/philosophical debate about fairness and morality with numbers attached.
As Yogi Berra said, "In theory there is no difference between theory and practice. In practice there is." And in practice, the outcomes are uncertain and dominated by other variables.
It would be more honest if everyone would stop pretending they can predict the future of the whole economy based on the tax code and simply said "The tax code is fair/unfair to [group], because of[reason], and therefore is should be [changed/kept the same]." The rest of it is just window dressing.
Re: Income Equality -- Three Models
I just signed up for this forum to correct somebody (I have read the ERE book, don't worry):
The number of homeless/beggars in Bangkok seems VASTLY smaller than the number of homeless/beggars in San Francisco. I lived in San Francisco just before I moved here - there's just no comparison. I got approached by more bums one one BLOCK of downtown SF than in an entire day of downtown Bangkok. And nobody in Bangkok shits on the streets.
The number of homeless/beggars in Bangkok seems VASTLY smaller than the number of homeless/beggars in San Francisco. I lived in San Francisco just before I moved here - there's just no comparison. I got approached by more bums one one BLOCK of downtown SF than in an entire day of downtown Bangkok. And nobody in Bangkok shits on the streets.
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RealPerson
- Posts: 875
- Joined: Thu Nov 22, 2012 4:33 pm
Re: Income Equality -- Three Models
I can second that. There are so many more beggars in SF than in Bangkok. I never saw anyone shit on the street, except once in Amsterdam, but he was not a beggar. That was just "Amsterdam normal" I presume.Triangle wrote:
The number of homeless/beggars in Bangkok seems VASTLY smaller than the number of homeless/beggars in San Francisco. I lived in San Francisco just before I moved here - there's just no comparison. I got approached by more bums one one BLOCK of downtown SF than in an entire day of downtown Bangkok. And nobody in Bangkok shits on the streets.
Re: Income Equality -- Three Models
hm. another thread to ponder on.
