Archive for the ‘taxes’ Tag

Tax Reduction? Yay! But …   Leave a comment

So I’ve been kind of nice to Donald Trump lately. I admire his regulatory rollback via executive order. But I’m not a Trump supporter, so don’t expect that to continue. I said when he got it right, I’d say so. That’s what I’m doing.

I’m writing this in late April to give myself some time to work on my novel. Trump has just released his tax plan and we will probably know the outcome by the time this publishes. No problem. I actually kind of like seeing how well I guess at something.

Under President Trump’s proposed tax reforms, individuals and corporations could see lower tax rates, and the number of tax brackets reduced. Conversely, the reforms would also eliminate most other deductions beyond the standard deduction, charitable contributions, and deductions for mortgage interest.

The standard deduction would be doubled, which is really a good thing for families, especially in the middle class. However, it takes that many more people off the tax rolls. Philosophically, I want to see the elimination of income tax entirely, but I oppose the idea that 50% or more of the population doesn’t may it. Why? Because those who pay no effective taxes tend to believe they “pay the right amount” and are much more comfortable with imposing taxes on those who make more than them, so they will vote for that … and that is just wrong. It’s as wrong to mug a millionaire in the park as it is to mug a poor person.

Corporate income taxes would drop to 15 percent. I’m not a corporation and Brad’s business is a sole-proprietorship, but this is tremendous news for small business people across the country who were absolutely hammered by Obama’s regulations. He appears unconstrained by the fake concept of revenue neutrality. Deficit neutrality should be achieved through spending cuts rather than revenue increases and experiences around the world have shown that a reduction of the corporate rate pays for itself. Canada and England have dramatically cut their rates and their revenue to GDP have stayed the same. Also, we know that the payoff in term of economic growth will be huge. We saw that in the 1980s, following Reagan’s tax restructuring.

Press releaseTrump also wants to repeal the alternative minimum tax (sometimes called the “awfully mean tax” because it overrides your potential deductions) and the estate tax (a.k.a. death tax). The information available right now is basic that it can be summed up by the graphic to your left, which came from a journalist who attended the White House press briefing.

It would eliminate deductions people claim for paying state and local income taxes, which could impact people who live in states like California and New York. Treasury Secretary Steve Mnuchin said it wasn’t the federal government’s job to “subsidize” these states. He’s absolutely right, though at current federal income tax rates combined with state income taxes in high-tax states would amount of about 80% of many people’s incomes.

Veronique de Rugy, Reason columnist and senior research fellow at the Mercatus Center of George Mason University, had a quick initial response:

Cutting the capital gain tax rate is good and so is his proposal to end many deductions. Plus ending the death tax and the AMT is excellent. I like the individual tax reform based on what I have seen but where are the spending cuts?

“Where are the spending cuts?” is libel to be a refrain from both libertarian and small-government conservatives who otherwise have positive feelings about these changes. Trump has shown a willingness to cut federal programs, but then he turned around and increased military spending as if that was somehow going to save the taxpayers money. I remember when Reagan promised the spending cuts would come later … and we had to wait for the Contract with America more than a decade later. Back then the national debt was considerably less than a trillion dollars and now it’s at $20 trillion. I don’t think we can wait for … later.

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Posted May 16, 2017 by aurorawatcherak in economics, Uncategorized

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Truth about Taxes   Leave a comment

In 1913, when the US federal income tax was first introduced, it was much simpler and easier to file taxes. Individual federal income tax rates started at 1%, with a maximum marginal income tax rate of only 7% on incomes above $500,000 (more than $12 million in today’s dollars). The personal exemption was $3,000 for individuals ($72,850 today) and $4,000 for married couples ($97,000 today). In other words, very few Americans pad to pay federal income tax since the average income in 1913 was only about $750. You can look this up yourself here.

Related imageWhat your visit to that chart will show is that taxes didn’t stay so low. It only took a few years for the government to raise the income tax substantially. The top marginal rate was 67% in 1917 and 2% for anyone making over $2,000.

Wilson’s administration of tax and spend was replaced by President Warren Harding, which ushered in Calvin Coolidge’s reformations of cutting government spending and lowering tax rates. Coolidge saw these as moral issues:

securing greater efficiency in government by the application of the principles of constructive economy, in order that there may be a reduction of the burden of taxation now borne by the American people. The object sought is not merely a cutting down of public expenditures. That is only the means. Tax reduction is the end.[i]

He described excessive taxation as “nothing more or less than a restriction upon the freedom of the people.” Coolidge understood that the task of spending and tax reduction was a “gigantic task” for his administration, but he argued:

We are seeking to let those who earn money keep more of it for themselves and give less of it to the Government. This means better business, more of the comforts of life, general economic improvement, larger opportunity for education, and a greater freedom for all the people. It is in essence restoring our country to the people of our country. It re-endows them not only with increased material but with increased spiritual values.[iv]

Tax rates during the 1920s had already started to be lowered by President Harding, but it was also important to lower government spending at the same time. Coolidge believed in a limited government and rejected the progressive philosophy that argued for a larger central government managed by an administrative regulatory bureaucracy. Coolidge believed that this was unconstitutional. “Government extravagance is not only contrary to the whole teaching of our Constitution, but violates the fundamental conceptions and the very genius of American institutions,” noted Coolidge.[v]

 

Coolidge lamented the efforts to abandon limited government and traditional federalism and he argued that ultimately the people must solve this problem. As he stated:

The cure for this is not in our hands. It lies with the people. It will come when they realize the necessity of State assumption of State responsibility. It will come when they realize that the laws under which the Federal Government hands out contributions to the States is placing upon them a double burden of taxation — Federal taxation in the first instance to raise the moneys which the Government donates to the States, and State taxation in the second instance to meet the extravagances of State expenditures which are tempted by the Federal donations.[viii]

 

Historian Burton W. Folsom, Jr. wrote that Coolidge “lowered tax rates, cut federal spending, and had budget surpluses every year of his presidency.”[x] In addition, Coolidge “finished his second term with the lowest misery index (unemployment plus inflation) of any president in the last one hundred years,” noted Folsom.[xi]

As a result of Coolidge’s budget and tax polices it unleashed a period of economic growth and expansion. It also resulted in low unemployment and an increase in the standard of living for the middle-class. Under Coolidge the federal budget fell to $3 billion in 1928 from over $5 billion in 1921.[xii] The Coolidge tax cuts also lowered tax rates and helped the business expansion which occurred during the 1920s.

Coolidge was replaced by the pro-spending and pro-taxation administrations of Hoover, FDR, Truman and Eisenhower when everybody paid between 20-91% of their income in taxes. Eisenhower reacted to the recession following the Korean War Armistice by cutting military spending significantly. Congress further reduced the budget overall. These led to increased growth in the private sector, but since taxes weren’t cut also, the economy took a sharp downward turn in 1958.

Starting in 1961, Democratic President John F. Kennedy initiated pro-growth tax reduction policies and achieved results comparable to Coolidge’s. When Kennedy took office as president in January 1961, the highest and lowest federal marginal personal income tax[R1] rates were 91 percent and 20 percent. Kennedy’s tax program cut those rates to 70 percent and 14 percent. Kennedy also cut the corporate income tax rate and the tax rates on capital gains, reduced taxes on dividends, and balanced the federal budget.

“It is a paradoxical truth,” Kennedy stated in 1963 at the Economics Club of New York, “that tax rates are too high today and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the tax rates.”

Fueled by pro-growth economic policies, the GDP growth rate averaged 4.4 percent per year from 1960 through 1969, the highest yearly growth rate per decade from 1950 to 2000. Correspondingly, the 5.5 percent US unemployment rate in 1960 dropped to a 3.5 percent rate by 1969.

Ronald Reagan sought to reduce income tax burden during his presidency. In his autobiography, An American Life, he explained “[M]y major was economics. But I think my own experience with our tax laws in Hollywood probably taught me more about practical economic theory than I ever learned in the classroom or from an economist.”

From firsthand experience, Reagan understood the links between work, taxes, and incentives:

At the peak of my career at Warner Bros., I was in the 94 percent tax bracket; that meant that after a certain point, I received only six cents of each dollar I earned and that the government got the rest. The IRS took such a big chunk of my earnings that after a while I began asking myself whether it was worth it to keep on taking work.

Something was wrong with a system like that, asserted Reagan:

When you have to give up such a large percent of your income in taxes, the incentive to work goes down. You don’t say, ‘I’ve got to do more pictures.’ You say ‘I’m not gonna work for six cents on the dollar.’

Reagan saw how confiscatory taxes at the top negatively impacted people in lower income groups:

If I decided to do one less picture, that meant other people at the studio in lower tax brackets wouldn’t work as much either; the effect filtered down, and there were fewer jobs available. I remember one scene in the Knute Rockne picture that had only a farmer and a horse in it on location that created work for 70 people.

In August 1981, Reagan signed the Economic Recovery Tax Act into law, slashing marginal income tax rates by 25 percent across the board over a three-year period. The highest marginal rate on unearned income dropped from 70 percent to 50 percent. The tax rate on capital gains fell from 28 percent to 20 percent.

By January 1983, the bulk of Reagan’s tax reductions were in place. With higher incentives to work, invest, and produce, the consequences were foreseeable. Between 1978 and 1982, the US economy grew at a rate of only 0.9 percent in inflation-adjusted terms. From 1983 to 1986, this growth rate shot up to 4.8 percent. The national unemployment rate dropped from 9.7 percent in 1982 to 5.5 percent by 1988.

Economist Stephen Moore summarized how economic growth and tax revenues increased under the tax cut policies of Reagan and Kennedy:

Many times, tax rate cuts – including in the 1960s under John F. Kennedy and in the 1980s under Mr. Reagan – have raised tax revenues from the wealthiest tax filers because lower rates reduce incentives for tax avoidance and recharge the batteries of the economy and grow taxable incomes.

In both the 1960s and 1980s, supply-side tax cuts were followed by increased revenues. As Larry Kudlow puts it in his soon-to-be-released book on the JFK tax cuts: ‘We had six percent growth and the tax payments by the wealthiest filers nearly doubled. We had quarters of six percent growth back then.’ After the Reagan cuts, the share of taxes paid by the top 1 percent rose from 19 percent in 1980 to above 25 percent in 1988, according to IRS tax return data.’

Moore drew parallels between the Kennedy and Reagan economic successes and President Trump’s proposed tax reforms: “The heart of the Trump tax plan is to cut our business tax from the highest in the world down to 15 percent, making our rate one of the lowest. This will reverse the stampede of businesses fleeing out of America,” generating domestic job growth.

“Small businesses – the backbone of our economy – will benefit too,” wrote Moore, regarding Trump’s tax proposal. “Their tax rate falls from close to 40 percent to 25 percent, because business owners pay taxes at the personal income tax rate. This will allow companies to invest more and hire more workers here at home.”

 

 

 

The bottom line about taxes, incentives, GDP growth, and government debt? “The biggest deficit we need to urgently fix is our growth deficit,” contends Moore.

We must pump up our GDP growth from the anemic one percent rate of Mr. Obama’s last six months up to a sustained 4 percent for five to 10 years. Here are some amazing statistics from the Congressional Budget Office. If you raise the growth rate by one percentage point over one decade it reduces the budget deficit by $3 trillion. If Mr. Trump can juice growth from 2 to 4 percent then poof, federal borrowing disappears by $6 trillion. Liberal economists pout that this kind of growth is impossible for America, but that’s what people said in the miserable 1970s, but Mr. Reagan (and JFK before him) proved that with the right policy incentives that get government off the back of business, a new era of prosperity is just around the corner.

Posted May 15, 2017 by aurorawatcherak in economics, Uncategorized

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Think about It   3 comments

Taxes Discourage Production   1 comment

The art of economics consists in looking not merely at the immediate, but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group, but for all groups.

This is an ongoing series of posts on Henry Hazlitt’s Economics in One Lesson. You can access the Table of Contents here. Although written in 1946, it still touches on many of the issues we face in 2017, particularly the fallacies government economic programs are built upon.

 

Remember, there is no such thing as a free lunch. Tax dollars come from people and businesses who would otherwise have used to those dollars to do something.

Henry Hazlitt doubted greatly that the wealth created by government spending would fully compensate for the wealth destroyed by the taxes imposed to pay for that spending.

It is not a simple question … of taking something out of the nation’s right-hand pocket to put into its left-hand pocket.

While the government spenders want us to believe that if they only take, say, 25% of the national income from private purposes to spend on public purposes, they neglect to mention that they are taking money from A in order to pay it to B. It’s not simply moving data around in a bookkeeping ledger. Yes, B is helped by the transfer of wealth, but A is harmed by that loss of income.

In our modern world there is never the same percentage of income tax levied on everybody. The great burden of income taxes is imposed on a minor percentage of the nation’s income; and these income taxes have to be supplemented by taxes of other kinds.

Image result for image of an essential government serviceThis affects business policies. Businesses that have less money to invest don’t expand their operations — or only expand into areas with minimal risk because they lack a savings cushion. This deters other observant people from starting new enterprises. Old employers do not provide more employment or better wages and others decide not to become employers at all.

There’s a similar effect on personal incomes taxed at 50-90 percent. People question whether they should work six, eight or 10 months a year for the government when they only take home six, four or two months of income to their families.

Additionally, the capital available for risk-taking itself shrinks enormously because it is being taxed away before it can be accumulated.

[C]apital to provide new private jobs is first prevented from coming into existence, and the part that does come into existence is then discouraged from starting new enterprises. The government spenders create the very problem of unemployment that they profess to solve.

Hazlitt recognized that some taxes are necessary to provide government functions that safeguard private production.

When the total tax burden grows beyond a bearable size, the problem of devising taxes that will not discourage and disrupt production becomes insoluble.

In other words, government should only spend on a very few needed services … roads might come into that … because if it takes too much from the private sector, eventually it destroys the private sector.

Posted January 16, 2017 by aurorawatcherak in economics

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Tax Effect in One Image   3 comments

Here’s an interesting graphic I ran across recently. Pink/magenta is negative (loss) while green is positive (gain). You can assume that Alaska and Hawaii are outliers because our migration rates are affected by not being attached to the contiguous 48, but take a good look at the states that are losing the most population and related income. Mostly high tax states. And then look at which states are gaining the most population and related income. Yeah ….

Illustrative!

Posted December 30, 2016 by aurorawatcherak in economics

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Why Socialists Must Raise Taxes on the Middle Class   Leave a comment

This was originally written about Bernie Sanders, but it applies to Hillary … and probably, Donald Trump. Lela

Daniel Bier

Willie Sutton was one of the most infamous bank robbers in American history. Over three decades, the dashing criminal robbed a hundred banks, escaped three prisons, and made off with millions. Today, he is best known for Sutton’s Law: Asked by a reporter why he robbed banks, Sutton allegedly quipped, “Because that’s where the money is.”

Sutton’s Law explains something unusual about Bernie Sander’s tax plan: it calls for massive tax hikes across the board. Why raise taxes on the middle class? Because that’s where the money is.

Found on Foundation for Economic Freedom (FEE)

The problem all politicians face is that voters love to get stuff, but they hate to pay for it. The traditional solution that center-left politicians pitch is the idea that the poor and middle class will get the benefits, and the rich will pay for it.

This is approximately how things work in the United States. The top 1 percent of taxpayers earn 19 percent of total income and pay 38 percent of federal income taxes. The bottom 50 percent earn 12 percent and pay 3 percent. This chart from the Heritage Foundation shows net taxes paid and benefits received, per person, by household income group:

But Sanders’ proposals (free college, free health care, jobs programs, more Social Security, etc.) are way too heavy for the rich alone to carry, and he knows it. To his credit, his campaign has released a plan to pay for each of these myriad handouts. Vox’s Dylan Matthews has totaled up all the tax increases Sanders has proposed so far, and the picture is simply staggering.

Every household earning below $250,000 will face a tax hike of nearly 9 percent. Past that, rates explode, up to a top rate of 77 percent on incomes over $10 million.

Paying for Free

Sanders argues that most people’s average income tax rate won’t change, but this is only true if you exclude the two major taxes meant to pay for his health care program: a 2.2 percent “premium” tax and 6.2 percent payroll tax, imposed on incomes across the board. These taxes account for majority of the new revenue Sanders is counting on.

But it gets worse: his single-payer health care plan will cost 80 percent more than he claims. Analysis by the left-leaning scholar Kenneth Thorpe (who supports single payer) concludes that Sanders’ proposal will cost $1.1 trillion more each year than he claims. The trillion dollar discrepancy results from some questionable assumptions in Sanders’ numbers. For instance:

Sanders assumes $324 billion more per year in prescription drug savings than Thorpe does. Thorpe argues that this is wildly implausible.

“In 2014 private health plans paid a TOTAL of $132 billion on prescription drugs and nationally we spent $305 billion,” he writes in an email. “With their savings drug spending nationally would be negative.”

So unless pharmaceutical companies start paying you to take their drugs, the Sanders administration will need to increase taxes even more.

Analysis by the Tax Foundation finds that his proposed tax hikes already total $13.6 trillion over the next ten years. However, “the plan would [only] end up collecting $9.8 trillion over the next decade when accounting for decreased economic output.”

And the consequences will be truly devastating. Because of the taxes on labor and capital, GDP will be reduced 9.5 percent. Six million jobs will be lost. On average, after-tax incomes will be reduced by more than 18 percent.

Incomes for the bottom 50 percent will be reduced by more than 14 percent, and incomes for the top 1 percent will be reduced nearly 25 percent. Inequality warriors might cheer, but if you want to actually raise revenue, crushing the incomes of the people who pay almost 40 percent of all taxes isn’t the way to go.

These are just the effects of the $1 trillion tax hike he has planned — and he probably needs to double that to pay for single payer. Where will he find it? He’ll go where European welfare states go.

Being Like Scandinavia

Sanders is a great admirer of Scandinavian countries, such as Denmark, Sweden, and Norway, and many of his proposals are modeled on their systems. But to pay for their generous welfare benefits, they tax, and tax, and tax.

Denmark, Norway, and Sweden all capture between 20-26 percent of GDP from income and payroll taxes. By contrast, the United States collects only 15 percent.

Scandinavia’s tax rates themselves are not that much higher than the United States’. Denmark’s top rate is 30 percent higher, Sweden’s is 18 percent higher, and Norway’s is actually 16 percent lower — and yet Norway’s income tax raises 30 percent more revenue than the United States.

The answer lies in how progressive the US tax system is, in the thresholds at which people are hit by the top tax rates. The Tax Foundation explains,

Scandinavian income taxes raise a lot of revenue because they are actually rather flat. In other words, they tax most people at these high rates, not just high-income taxpayers.

The top marginal tax rate of 60 percent in Denmark applies to all income over 1.2 times the average income in Denmark. From the American perspective, this means that all income over $60,000 (1.2 times the average income of about $50,000 in the United States) would be taxed at 60 percent. …

Compare this to the United States. The top marginal tax rate of 46.8 percent (state average and federal combined rates) kicks in at 8.5 times the average U.S. income (around $400,000). Comparatively, few taxpayers in the United States face the top marginal rate.

The reason European states can pay for giant welfare programs is not because they just tax the rich more — it’s because they also scoop up a ton of middle class income. The reason why the United States can’t right now is its long-standing political arrangement to keep taxes high on the rich so they can be low on the poor and middle.

Where the Money Is – And Isn’t

As shown by the Laffer Curve, there is a point at which increasing tax rates actually reduces tax revenue, by discouraging work, hurting the economy, and encouraging tax avoidance.

Bernie’s plan already hammers the rich: households earning over $250,000 (the top 3 percent) would face marginal rates of 62-77 percent — meaning the IRS would take two-thirds to three-quarters of each additional dollar earned. His proposed capital gains taxes are so high that they are likely well past the point of positive returns. The US corporate tax rate of 40 percent is already the highest in the world, and even Sanders hasn’t proposed increasing it.

The only way to solve his revenue problem is to raise rates on the middle and upper-middle classes, or flatten the structure to make the top rates start kicking in much lower. You can see why a “progressive” isn’t keen on making more regressive taxes part of his platform, but the money has to come from somewhere.

The bottom fifty percent don’t pay much income tax now (only $34 billion), but they also don’t earn enough to fill the gap. Making their taxes proportionate to income would only raise $107 billion, without even considering how the higher rates would reduce employment and income.

The top 5 percent are pretty well wrung dry by Sanders’ plan, and their incomes are going to be reduced by 20-25 percent anyway. It’s hard to imagine that there’s much more blood to be had from that stone.

But households between the 50th and the 95th percentile (incomes between $37,000 to $180,000 a year) earn about 54 percent of total income — a share would likely go up, given the larger income reductions expected for top earners. Currently, this group pays only 38 percent of total income taxes, and, despite the 9 percent tax hike, they’re comparatively spared by the original tax plan. Their incomes are now the lowest hanging fruit on the tax tree.

As they go to the polls this year, the middle class should remember Sutton’s Law.

Posted July 1, 2016 by aurorawatcherak in economics, Uncategorized

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Arguing with the Indoctrinated 5 (What the Rich Owe Me)   2 comments

There are generally two types of workers in this world.

There are people who are risk-adverse who work for someone else, who move on to other jobs when the company is struggling or going bankrupt. Chances are good they’ll find a better job with the competitor who just ran their former boss out of business.

Then there are entrepreneurs who leverage everything to build a company that employs the risk-adverse. These entrepreneurs risk losing everything in order to build their businesses. When the company tanks, they lose their homes, their cars, their savings, their retirements, their everything. With great risk comes the potential for great profit or crushing failure.

I’m risk adverse. I make a modest income by working 40 hours a week and I invest in “safe” things like my mortgage and retirement account. Maybe if I have a little extra, I buy some stock, but that’s as risky as I’ll ever get because I like my current life too much to risk losing everything on a huge gamble.

My father-in-law was a gambler. Instead of bellying up to the Blackjack table in Vegas, he bet everything on a company. And it paid off in millions of dollars of income … for a while. At least three times in the 33 years I’ve known him, he’s lost everything and had to start all over. This time, he’s 74 years old and he can’t do it. He’ll live the rest of his life on $1600 in Social Security income while the people he employed will find other jobs with the competitors who ran him out of business by being more competitive.

Brad and I agree that we owe Leo nothing except the offer of a bedroom if he’d like to come live with us. We don’t have a lot of money, but we have a house and we are willing to share. He made millions and he didn’t save any of it for his retirement. That’s the choice he made and the consequences he should assume.

We also agreed — back when Leo was rolling in dough — that he owed us nothing. His income was his income and he didn’t have to share with us because we didn’t earn his wealth. There were some really expensive (but not useful in Alaska) Christmas gifts that came our way at times, but we have gotten what we own currently by the sweat of our own brows through the jobs that we worked.

If we owe anyone anything (besides the bank — note to self, the mortgage is due again), it’s our employers for employing us. They could have hired other people. They didn’t have to employ us.

There are a lot of people who think that “the rich” owe them something because they are not as wealthy as “the rich”. I disagree. My husband is a construction worker who has become a small business owner. Every employer he’s ever had was “rich” compared to him. They were “rich” because they owned a company that made enough money to support themselves and some employees. Now, when you divided all that “wealth” up among the employees and the overhead, it might actually be that the “rich” boss took home less money than the inividual employees. In fact, Brad has actually worked for that guy a couple of times. The company was “rich”, but the owner wasn’t … not yet, anyway.

Several of those companies are gone now because their owners got tired of being risk-takers and decided to join the ranks of the risk-adverse. In fact, I work with that guy now. Others of those guys have since become “rich”. They own nice houses and drive nice cars while also owning a successful business.

And what is wrong with that? They earned it by working for it.
Most “rich” Americans did not start out in the wealth-class nor did they get there by lucking into being the CEO of a Wall Street investment firm. https://www.gsb.stanford.edu/insights/joshua-rauh-what-forbes-400-list-says-about-american-wealth. Most US “millionnaires” are folks like my sister-in-law.

Amy grew up in a middle-middle-class family. Her father was a road engineer. She gained the benefit of his income in that he paid for her college education. She took that education and got a job as an accountant. When her first husband dragged her into an investment scheme that took the house she’d paid for,and all of their savings and created a debt crater the size of Detroit, she dumped him, kept her full-time job, moved into an apartment in a scary neighborhood, borrowed some money from her parents to pay for schooling so she could get her CPA and started killing her half of that debt. Within five years and at the age of 32, she was working for a nice salary (because she has highly sought after skills), had paid off the debt, repaid her parents for the loan, closed on a small home and begun saving for retirement because Ronald Reagan had let all of us know that there was no actual money in the Social Security Trust Fund. Until this decade, she never made more than $60,000 in annual income. She has made judicial investments in the stock market and mutual funds and she’s participated in her employers’ 401K programs. She’s got a good BS meter and she’s guessed the market a couple of times to avoid a huge crash.

She now has about $1.7 million in her combined retirement accounts. She got that by being debt free except for her mortgage for the last 40 years (she’s been mortgage free for almost 20 years now, but that was my brother’s contribution to the marriage). She has relentlessly saved 15% of her income for retirement. Careful investment strategy and the law of compounding interest did the rest.

She is a millionaire and, by extension, so is my brother. At least I shouldn’t have to worry about him needing to move in with me. She plans to live off the interest of her accounts and she may well need all of it because her mother is pushing 100 and still lively and living on her own.

And yet, in this world today, there are many people who would like to take 50% of that savings account to “give to the poor” because it’s just “not fair” that Amy has so much money and others do not.

She EARNED it by working for it, so why should she be forced to share it with others?

She doesn’t owe me a thing and she knows me, so why is there an assumption that she owes strangers anything?

Posted November 16, 2015 by aurorawatcherak in cultural divide

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