Economy Biden's tax plan doesn't change anything for those under 400K

[Madmick]

Yep, it doesn’t change a thing at all because the wealthy and corporations are going to eat those increased taxes. They will not pass those costs down to the consumers and poor folks.

That's fine. Let them. This opens the door to smaller, hungrier corporations who are willing to undercut them on price.

I don't see how any reasonable American-- left wing or right wing-- could oppose this general strategy in 2020. FFS, he's leaving those who make 399K a year alone. That's the epitome of the uppper middle class throughout nearly every county in America.

 

[panamaican]

In seven fucking years. By your own words. Plenty of time for someone else to implement something better or continue them.

Jesus

Clearly you don't know what you're talking about, they rise incrementally. Every other year, they increase. Fully returning to the prior level in 2025 (2027 was my mistake).

Plenty of time for someone to implement something, assuming that someone implements something - which is a bad assumption given that the 2 parties want different things and neither party controls Congress. But that's not really the point.

The point is that Biden doesn't have to do anything for the poor and the middle class to see a tax increase. Trump's individual tax cuts for the lower brackets were never going to be permanent. So if Biden leaves the taxes alone, poor and middle class people will see a tax increase while the well-to-do and the corporations won't. Now, if you're fine with that then you're fine with it and can continue to criticize Joe Biden for his tax plan. But if you have an issue with raising taxes on middle class earners while letting the rich keep their tax breaks, your issue should be with Trump's tax plan that he and the GOP passed, not with Biden and his hypothetical tax plan.

 

[Mcountry]

Clearly you don't know what you're talking about, they rise incrementally. Every other year, they increase. Fully returning to the prior level in 2025 (2027 was my mistake).

Plenty of time for someone to implement something, assuming that someone implements something - which is a bad assumption given that the 2 parties want different things and neither party controls Congress. But that's not really the point.

The point is that Biden doesn't have to do anything for the poor and the middle class to see a tax increase. Trump's individual tax cuts for the lower brackets were never going to be permanent. So if Biden leaves the taxes alone, poor and middle class people will see a tax increase while the well-to-do and the corporations won't. Now, if you're fine with that then you're fine with it and can continue to criticize Joe Biden for his tax plan. But if you have an issue with raising taxes on middle class earners while letting the rich keep their tax breaks, your issue should be with Trump's tax plan that he and the GOP passed, not with Biden and his hypothetical tax plan.

I don't mind seeing different approaches in how each side wants to help the poor. But Biden is your typical politician. I find it HILARIOUS that the tax hikes start AFTER the exact salary he will be making. It's sooooo fucking typical democratic bullshit.

 

[panamaican]

Does the money you are paying in taxes increase, yes or no? Is your take home pay less because of the money you are giving Uncle Sam? If the answer is yes, then the bottom line is Biden's proposed policies result in tax increases on people earning less than $400k. There are direct increases and indirect increases that are going to affect people earning less than $400k.

No. The money you are paying in taxes does not increase. <--- this is the part you're struggling with (probably because you don't understand what a tax deferral or that you can use other deductions to reduce the amount of money you're paying).

Your take home pay is irrelevant, your tax burden is the culmination of lots of choices and lots of available deductions and credits. Which apparently is something you don't understand because you're a W-2 earner who isn't using any other tax strategies to reduce his taxable income?

But since the answer to the first question was "no", then Biden's proposed policies do not result in tax increases on people earning less than $400k.

 

[nhbbear]

Mad this helps the middle and lower class how?

 

[panamaican]

I don't mind seeing different approaches in how each side wants to help the poor. But Biden is your typical politician. I find it HILARIOUS that the tax hikes start AFTER the exact salary he will be making. It's sooooo fucking typical democratic bullshit.

So you're just going to completely sidestep the issue of the TCJA fading out for the poor and middle class? The standard deduction dropping significantly? All of those things that affect lower income people.

Ok, whatever. Why discuss actually tax policy when we can skip the details and just claim that everything the other side does is bad or good.

If you wanted to make it about politics - it doesn't bother you that the tax cuts for the middle class were all set to expire right after Trump's 2nd term would have ended? That's not self-serving political bullshit?

 

[boxingskills]

Yep, it doesn’t change a thing at all because the wealthy and corporations are going to eat those increased taxes. They will not pass those costs down to the consumers and poor folks.

Stupid people don't understand how tax increases to the rich hurt the middle class and poor.

 

[The Big Bang]

Lol. How the fuck you get dubs?

Madmick hit me with dubs because...Madmick.

On election night I accidentally posted a thread about Biden winning and after a couple minutes (literally) and THEN i changed the title to "delete" and I explicitly said that it was an accident.............but that was enough to be dubbed...dubs.

 

[llperez22]

Listen, Trump's tax cuts had sunset provisions in them. They are going to expire anyway.

So whether Joe does something or not, your taxes are going to go up. I'm assuming your "fuck you" is now directed at Trump?

my understanding is they were set to go up in 2027 but biden is gonna do it immediately? If so then no, my fuck you is still at biden.

 

[Lubaolong]

No. The money you are paying in taxes does not increase. <--- this is the part you're struggling with (probably because you don't understand what a tax deferral or that you can use other deductions to reduce the amount of money you're paying).

There is no easy way for most people to shelter the amount of money you can with retirement accounts.

 

[panamaican]

There is no easy way for most people to shelter the amount of money you can with retirement accounts.

Yes, there is. It just requires more planning than most people are willing to do. Sit down with a good accountant or a good tax attorney and make a plan. Once you have that plan, it's not particularly difficult to follow it.

But I'm going to return your attention to something that I think you're overlooking as an important piece of information. Your 401(k) is a tax deferral. Even though you're putting in pretax dollars in 2020, you're paying taxes on the money when you take it out in the future, say 2050. You're not avoiding the tax. You're not reducing your tax burden. You're changing the timing.

Ideally, you take it out when you're in a lower tax bracket and so you get a savings on the tax arbitrage. But if you've been putting away a good chunk of money, have large withdrawals in the future and/or other income sources, you could end up in the same tax bracket as you would have been anyway. So, you would still need smart tax strategies in the future to actually reduce the tax burden.

This is an issue that comes up with real estate depreciation as well. People take the depreciation for the tax benefit as they own the property. Forgetting that when the property is later sold for profit, all of the depreciation is added back in to calculate the taxable profit. That has to be planned for.

401(k)s, depreciation deductions are designed to encourage you to do something in the immediacy but Uncle Sam is not giving away that money. They're letting you hold on to it for a little bit longer.

If you want to hold on to the money and never give it back, you have to take the next step in tax planning, which is how to manipulate the timing for rate gains or push the deferral out so far that you effectively never pay it back. But just putting money into a 401(k) doesn't change your actual tax burden to the government, just the timing of when you eventually pay it. That's obviously simplified.

 

[Lubaolong]

Yes, there is. It just requires more planning than most people are willing to do.

There are easy ways for the average person to shelter as much money? Name them.

But I'm going to return your attention to something that I think you're overlooking as an important piece of information.

This doesn’t sound condescending at all.

Even though you're putting in pretax dollars in 2020, you're paying taxes on the money when you take it out in the future, say 2050. You're not avoiding the tax. You're not reducing your tax burden. You're changing the timing.

Nope. Most people’s income drops in retirement, putting them into a lower tax bracket than when they were working. Money you take from a tax-deferred account during retirement therefore gets taxed at a lower rate than what you would normally pay.

 

[panamaican]

There are easy ways for the average person to shelter as much money? Name them.

charitable donations.

This doesn’t sound condescending at all.

I'm sorry you feel that way. But I do think you're overlooking it when discussing tax burdens. You can't treat deferred taxes like they don't exist, they're part of the calculation.

Nope. Most people’s income drops in retirement, putting them into a lower tax bracket than when they were working. Money you take from a tax-deferred account during retirement therefore gets taxed at a lower rate than what you would normally pay.

Ideally, not automatically.

It is very possible for people to end up in the same tax bracket upon retirement that they were in prior to. The top tax bracket kicks in at a pretty low level. And if you're working for a business with a generous retirement system, like a partner at a big accounting firm. Or you picked up additional or deferred revenue streams during your working life, you can find yourself back where you started.

I won't bore you with anecdotes but if you're in the medical profession, several of your colleagues are already building post-retirement revenue streams that will eventually equal if not pass their W-2 salaries. And that will have consequences when they pull out their mandatory 401(k) withdrawals in a few decades..

 

[Headkicktoleg]

Yes, there is. It just requires more planning than most people are willing to do. Sit down with a good accountant or a good tax attorney and make a plan. Once you have that plan, it's not particularly difficult to follow it.

But I'm going to return your attention to something that I think you're overlooking as an important piece of information. Your 401(k) is a tax deferral. Even though you're putting in pretax dollars in 2020, you're paying taxes on the money when you take it out in the future, say 2050. You're not avoiding the tax. You're not reducing your tax burden. You're changing the timing.

Ideally, you take it out when you're in a lower tax bracket and so you get a savings on the tax arbitrage. But if you've been putting away a good chunk of money, have large withdrawals in the future and/or other income sources, you could end up in the same tax bracket as you would have been anyway. So, you would still need smart tax strategies in the future to actually reduce the tax burden.

This is an issue that comes up with real estate depreciation as well. People take the depreciation for the tax benefit as they own the property. Forgetting that when the property is later sold for profit, all of the depreciation is added back in to calculate the taxable profit. That has to be planned for.

401(k)s, depreciation deductions are designed to encourage you to do something in the immediacy but Uncle Sam is not giving away that money. They're letting you hold on to it for a little bit longer.

If you want to hold on to the money and never give it back, you have to take the next step in tax planning, which is how to manipulate the timing for rate gains or push the deferral out so far that you effectively never pay it back. But just putting money into a 401(k) doesn't change your actual tax burden to the government, just the timing of when you eventually pay it. That's obviously simplified.

if your're saving correctly and not making a SHIT ton of money roth is the way to go.

 

[panamaican]

if your're saving correctly and not making a SHIT ton of money roth is the way to go.

I personally think that people should be building revenue streams but if they can't any investment that eventually ends up in the stock market is a good way to go but yeah you can't argue with tax free growth.

 

[Lubaolong]

charitable donations.

That’s not sheltering income for your retirement. That’s giving it away. I want you to tell me easy ways an average person can avoid paying taxes on large sums of money.

I won't bore you with anecdotes but if you're in the medical profession, several of your colleagues are already building post-retirement revenue streams that will eventually equal if not pass their W-2 salaries. And that will have consequences when they pull out their mandatory 401(k) withdrawals in a few decades..

Sounds incredibly rare that someone would have passive income in retirement that would exceed their income during their working years.

 

[Headkicktoleg]

I personally think that people should be building revenue streams but if they can't any investment that eventually ends up in the stock market is a good way to go but yeah you can't argue with tax free growth.

Sorry, I was talking about 401k vs roth for basic retirement savings. Generally speaking the average person is best meeting the employer match for basic 401k and having a Roth for additional savings. I grew up very conservative with our money and my parents taught me raise my Roth by 1% every year and every time you get a raise and you will be set for retirement. My wife and I are in a better place at our age than our parents were so I think in the next 5 to 10 years we will go for more aggressive investments like real estate or starting a business (my wife's dream)

 

[panamaican]

That’s not sheltering income for your retirement. That’s giving it away. I want you to tell me easy ways an average person can avoid paying taxes on large sums of money.

That's a bad question, the average person isn't sheltering large sums of money. And the original premise was about reducing one's tax burden. The "sheltering" element you only added in your last question.

But even that's besides the point. People use charities to shelter money from the government. They reduce their tax burden by strategic giving. If the goal is to reduce your taxes, charitable giving works extremely well. Especially if you create the charity for something that matters to you and fund it yourself.

Sounds incredibly rare that someone would have passive income in retirement that would exceed their income during their working years.

Then you don't know enough well-to-do people or the right type of such people. Also, I didn't say that the income had to pass their working years income, only that they're in the same tax brackets. Some people will certainly pass their working years income but otherwise, you just need to hit the same bracket.

As this conversation goes on, you're moving further and further from your original point - which is that changes to the 401(k) plan means a tax increase for people. I think we've established that it doesn't and now we're just discussing what someone might do to duplicate the benefit. This is why I keep going back to the deferral element because you're not duplicating the contribution year's tax reduction, you're duplicating the withdrawal's years tax reduction.

 

[panamaican]

Sorry, I was talking about 401k vs roth for basic retirement savings. Generally speaking the average person is best meeting the employer match for basic 401k and having a Roth for additional savings. I grew up very conservative with our money and my parents taught me raise my Roth by 1% every year and every time you get a raise and you will be set for retirement. My wife and I are in a better place at our age than our parents were so I think in the next 5 to 10 years we will go for more aggressive investments like real estate or starting a business (my wife's dream)

Don't start a business. The failure rate is too high. Buy a good business from someone who is retiring.

That's what people are doing in the stock market - they're buying into existing profitable businesses. None of us can afford to completely buy a business like Amazon or Home Depot but we're still capable of buying much smaller businesses. Building a portfolio of small businesses is no different than buying stocks from a math perspective.

 

[terrapin]

Obviously high school kids who are just entering the workforce should make a living wage.

I have never met an adult who has ever worked for minimum wage in my life. There is barely any jobs at minimum wage.

raising minimum wage to 15 an hour will cause many jobs that pay more than minimum wage to raise those wages.