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Re: Will Trump be Re-elected?

Posted: Wed May 15, 2019 10:20 pm
by Kriegsspiel
Man, I still don't get what you guys are saying. Is it basically to allocate your employees dividends, like shareholders?

I do know that you can shield a lot of income from taxes with the currently available programs: HSAs, IRAs, and 401ks. $28,000 between them, even more if you run your own LLC.

Re: Will Trump be Re-elected?

Posted: Thu May 16, 2019 7:03 am
by pugchief
Kriegsspiel wrote:
Wed May 15, 2019 10:20 pm
Man, I still don't get what you guys are saying. Is it basically to allocate your employees dividends, like shareholders?

I do know that you can shield a lot of income from taxes with the currently available programs: HSAs, IRAs, and 401ks. $28,000 between them, even more if you run your own LLC.
401k contributions are subject to payroll taxes (social security and medicare: 7.65% to employee and another 7.65% to employer). Profit sharing contributions are not subject to payroll taxes, so they could be a better deal for everyone, i.e., a more practical use for the money. Except you could rarely convince an employee to choose profit sharing over salary increases, because of the delayed gratification.

Re: Will Trump be Re-elected?

Posted: Thu May 16, 2019 8:10 am
by Kriegsspiel
Ok I have it now. It then leads to a couple questions...

You're saying it's a better program than 401ks because it avoids payroll taxes. Basically throwing out SS and Medicaid? What about for people who were in the workforce paying payroll taxes and don't have a profit sharing account; without a new bottom on the pyramid the SS fund is going to dry up. You don't think the federal government would throw a wrench in the works?

Second, why would it be easier to get an employee to participate in profit sharing vs. the current practice (AFAIK) of opting out, as opposed to opting in, to a 401k? It seems like it would be the same self-selectors, as jhogue put it, who would do either one after they figured out the advantages and disadvantages of profit sharing and/or 401ks.

EDIT: or maybe so few people will participate in payroll tax-free profit sharing that the effect on SS is negligible, and the people smart enough to take advantage of the tax shield just win really hard.

Re: Will Trump be Re-elected?

Posted: Thu May 16, 2019 11:17 am
by pugchief
Kriegsspiel wrote:
Thu May 16, 2019 8:10 am
Ok I have it now. It then leads to a couple questions...

You're saying it's a better program than 401ks because it avoids payroll taxes. Basically throwing out SS and Medicaid Medicare?
yes
What about for people who were in the workforce paying payroll taxes and don't have a profit sharing account; without a new bottom on the pyramid the SS fund is going to dry up. You don't think the federal government would throw a wrench in the works?
It's going to dry up anyway. And the politicians are the ones who made the rules.
Second, why would it be easier to get an employee to participate in profit sharing vs. the current practice (AFAIK) of opting out, as opposed to opting in, to a 401k? It seems like it would be the same self-selectors, as jhogue put it, who would do either one after they figured out the advantages and disadvantages of profit sharing and/or 401ks.
You can't opt in/out of profit sharing. If the employer makes a contribution to the plan, the funds are allocated somewhat* pro-rata to ALL employees. But if I already gave a raise to someone last month, there is now less discretionary money to contribute to profit sharing.
EDIT: or maybe so few people will participate in payroll tax-free profit sharing that the effect on SS is negligible, and the people smart enough to take advantage of the tax shield just win really hard.
*The rules are very complicated.

Re: Will Trump be Re-elected?

Posted: Fri May 17, 2019 10:43 am
by Kriegsspiel
Kriegsspiel wrote:
Thu May 09, 2019 4:18 pm
Something (somewhat related) that gets me is how many people refuse to leave high COL locations when they aren't earning the high incomes that would justify it. Like, if you are working in one of those bad jobs, especially because you've reached your Peter Principle ceiling, you will vastly improve your life by going and doing it in a low COL location. I'm thinking people like warehouse workers, retail workers, fast food, those kinds of things. You could live a fairly middle class lifestyle working at a fast food joint for 30 hours a week in a large portion of the country.
Image

$1,200 for 1 of 4 bunk beds in a room in order to live near an internship, via Granola Shotgun.

Re: Will Trump be Re-elected?

Posted: Fri May 17, 2019 11:31 am
by moda0306
Kriegsspiel wrote:
Fri May 17, 2019 10:43 am
Kriegsspiel wrote:
Thu May 09, 2019 4:18 pm
Something (somewhat related) that gets me is how many people refuse to leave high COL locations when they aren't earning the high incomes that would justify it. Like, if you are working in one of those bad jobs, especially because you've reached your Peter Principle ceiling, you will vastly improve your life by going and doing it in a low COL location. I'm thinking people like warehouse workers, retail workers, fast food, those kinds of things. You could live a fairly middle class lifestyle working at a fast food joint for 30 hours a week in a large portion of the country.
Image

$1,200 for 1 of 4 bunk beds in a room in order to live near an internship, via Granola Shotgun.
This type of stuff is obviously obscene compared to it's big-city counterpart in 1960 or so.

I'd be curious to know how the more small-town and rural counterpart compares to its 1960 doppleganger in-terms of cost vs median income.

Yeah, ipads & air conditioning are great and all, but the big ones that people need to afford to rise above and have a hope of financial security are their rent, food and transportation costs. If those three are over-taking real wages at the lower quintiles, then we have a problem.

Not to say that personal responsibility couldn't help get folks out of these messes, but advocating that on a macro-scale is essentially asking people to abandon their social and family networks. Folks didn't have to do this in 1960 to afford the basics. Further, one of the most effective ways to help keep living costs down is a solid family and social network. As atomized units moving into a town we don't know, we've lost a good chunk of the economic foundation that we were hoping to reclaim in the first place. Further, on less of a financial and more social/phychological basis, I tend to think beyond a certain percentage of the population who generally dislike their home town or want a different, more independent life experience, expecting mass, scattered movement to be the solution to wage stagnation seems simultaneously mostly counter-productive as well as an extremely cryptic way to solve the "stagnant real wages" problem.

Re: Will Trump be Re-elected?

Posted: Fri May 17, 2019 10:23 pm
by Kriegsspiel
moda0306 wrote:
Fri May 17, 2019 11:31 am
This type of stuff is obviously obscene compared to it's big-city counterpart in 1960 or so.
Yea that's what I think too. Seeing people talk about how CHEAP places were back then, California especially, makes me feel... not nostalgic, but something like that.
I'd be curious to know how the more small-town and rural counterpart compares to its 1960 doppleganger in-terms of cost vs median income.
It would be region-dependant. There are tons of places throughout the Midwest and South where you can buy a house on a McDonald's salary, like I was saying before. But a small town in California? No, the comparison is pure silliness.
Yeah, ipads & air conditioning are great and all, but the big ones that people need to afford to rise above and have a hope of financial security are their rent, food and transportation costs. If those three are over-taking real wages at the lower quintiles, then we have a problem.
Food seems fairly similar across the country. Transportation seems dependent on personal choices; not just whether you decide to buy a small 4 cylinder or a luxury SUV, but whether you choose to live somewhere you don't need to spend a lot on gas, tolls, or whatever.
Not to say that personal responsibility couldn't help get folks out of these messes, but advocating that on a macro-scale is essentially asking people to abandon their social and family networks. Folks didn't have to do this in 1960 to afford the basics. Further, one of the most effective ways to help keep living costs down is a solid family and social network. As atomized units moving into a town we don't know, we've lost a good chunk of the economic foundation that we were hoping to reclaim in the first place. Further, on less of a financial and more social/phychological basis, I tend to think beyond a certain percentage of the population who generally dislike their home town or want a different, more independent life experience, expecting mass, scattered movement to be the solution to wage stagnation seems simultaneously mostly counter-productive as well as an extremely cryptic way to solve the "stagnant real wages" problem.
Housing is the big one and really reflects the supply and demand law. If people insist on fighting the law of supply and demand (say, by all wanting to live on the California coast), I don't know that there's a solution to that. I know I rag on California a lot. I know people there want to live near their families who WERE fortunate enough to have been born back when it was affordable to live there. But if they're competing for housing against other people who make more money than they do, and the other people can pay more for the housing... what's there to do? I think it's the difference between living in a country that hasn't been fully settled, and a full world, as Herman Daly might say.

I did not expect moda and Tucker Carlson to have so much in common.

Re: Will Trump be Re-elected?

Posted: Sat May 18, 2019 1:52 pm
by jhogue
See “The Myth of Wage Stagnation” in the op-ed page of today’s Wall Street Journal.

The authors” argument is that the Bureau of Labor Statistics does not accurately account for the massive substitution effect stemming from the near-universal adoption of innovations like cell phones.

Re: Will Trump be Re-elected?

Posted: Sun May 19, 2019 6:41 am
by dualstow
jhogue wrote:
Sat May 18, 2019 1:52 pm
See “The Myth of Wage Stagnation” in the op-ed page of today’s Wall Street Journal.
Hello gyro forum. Your friendly link bot here
https://www.wsj.com/articles/the-myth-o ... 1558126174

Re: Will Trump be Re-elected?

Posted: Sun May 19, 2019 11:52 am
by sophie
Thanks dualstow! One of these days I'll have to cave and subscribe to WSJ. They publish a lot of good stuff.

I detect an undercurrent in the article to propose indexing Social Security and other pensions by chained CPI in order to gradually cut benefits going forward.

Certainly we all agree that technological innovations have improved our lives tremendously in the last half century. You could argue, though, that along with the improvements cited has come a big increase in mandatory spending, which ends up feeling like you're increasingly squeezed for cash. For example, you can't buy a car with the limited accouterments that we were accustomed to in the 1970s. Same is true of a house in most situations. And, with the increase in proportion of college graduates, you really have to play the game if you want a career beyond being a cashier or burger flipper. It's also increasingly difficult to navigate modern society without a smartphone. Then there's medical, dental, and vision care expenses, eating up a lot of those 30% of employer benefits before you even start getting to the after tax costs.

So it's a case of not being able to put the genie back in the bottle. You can theoretically maintain your standard of living on reduced wages wrt inflation, but that's a lot easier to do in theory than in practice.

Re: Will Trump be Re-elected?

Posted: Sun May 19, 2019 2:59 pm
by dualstow
My pleasure, Soph.
Kriegsspiel wrote:
Fri May 17, 2019 10:43 am
$1,200 for 1 of 4 bunk beds in a room in order to live near an internship, via Granola Shotgun.
Good read. As a pedestrian, I liked the previous entry, too: “Obstacle Course.”

Re: Will Trump be Re-elected?

Posted: Mon May 20, 2019 7:17 am
by jhogue
No doubt former US senator Phil Gramm has a partisan axe to grind, but he has some impressive company. I seem to recall that Alan Greenspan also favored a re-calibration of the BLS indices a number of years ago. If I am not mistaken, he suggested that the current indices overstated inflation and would cause a rise in entitlement expenditures in the federal budget. Prophetic, isn't it?

I still find it bizarre that politicians can cry that there has been nothing but wage stagnation for the past 50 years and yet real median net worth in this country has increased by 172% in the same time period. How are those simultaneous trends even possible?