Gyroscopic Investing

In case you all missed it....here's part of his plan to "tax the rich":

https://www.forbes.com/sites/ebauer/202 ... 21a1604eb0

This is of course a long way from becoming law, and there are a lot of uncertainties in what exactly this means. Like, if you only get a 20% tax credit for 401K contributions instead of a straight deduction, and you think you're likely to be in a 22% bracket after retirement, then suddenly you're better off not contributing to the 401K and simply putting it all in taxable savings - especially if the 401K has fees or restricts investment options.

There's also the fact that going forward, I'm thinking I'd way rather have money in the PP (or GB) than in a Bogleheads 60/40. That is an intangible argument for forgoing 401K contributions and opting instead for taxable savings. On the other hand, there are good reasons for a fat 401K account: funds that will be inherited, and ability to Roth-convert and thus protect future earnings.

Overall though...I think this would be a spectacularly bad idea. If we thought there was a retirement crisis coming up, with Social Security benefits likely being reduced in future, this would make it that much worse by discouraging savings in a large segment of the population.

Just playing Biden's advocate here, in terms of the retirement crisis: If there's a fixed 20% refundable tax credit, then many people who have low incomes with virtually no incentive to save currently (because a current tax deduction doesn't do much for them) now suddenly are being paid to put money into a retirement account. Whether you think that in itself is good or bad, it's certainly likely to cause them to put more money into a retirement account than they do now.

Xan wrote: ↑Fri Sep 18, 2020 11:44 am Just playing Biden's advocate here, in terms of the retirement crisis: If there's a fixed 20% refundable tax credit, then many people who have low incomes with virtually no incentive to save currently (because a current tax deduction doesn't do much for them) now suddenly are being paid to put money into a retirement account. Whether you think that in itself is good or bad, it's certainly likely to cause them to put more money into a retirement account than they do now.

Could be, and that would apply to people in the 15% bracket and below. It's the people in the 22%+ brackets who are going to get hit. 22% bracket does not generally qualify as "rich" especially in high-tax states. Losing some of their retirement savings incentive is going to hurt - and, that group is going to need their savings more since a smaller proportion of their pre-retirement income will be supplied by Social Security, compared to lower income groups.

It's going to really suck to live in a high tax state if Biden gets elected. How ironic!!!!

Yes that’s a common theme. Voting for Biden goes against self interest for anyone above poverty level income or who is not a favored minority.

Restoring the federal salt deduction, which Biden promises to do, will help some. Of course, I don’t see how he’ll be able to do that while trying to push through $10 trillion in new spending with a plan for new taxes that will raise only $3 trillion.

WiseOne wrote: ↑Sat Sep 19, 2020 7:50 am Yes that’s a common theme. Voting for Biden goes against self interest for anyone above poverty level income or who is not a favored minority.

Restoring the federal salt deduction, which Biden promises to do, will help some. Of course, I don’t see how he’ll be able to do that while trying to push through $10 trillion in new spending with a plan for new taxes that will raise only $3 trillion.

Oh, that's easy. The Fed has a magic printing press that can create unlimited amounts of "money" at almost no cost.

Actually, why not promise to get rid of all taxation and just pay for everything by money printing?

I guess the only reason the Dems haven't made that pitch is that a lot of their base wants high taxes on the productive to punish them, not to raise money.

Playing devil's advocate, Why do only democrats have to pay for things?

Last few President's, growth of the deficit goes up under Republicans, down under Democrats.

Gone up bigly under current administration.

Dieter wrote: ↑Sat Sep 19, 2020 12:10 pm Playing devil's advocate, Why do only democrats have to pay for things?

Last few President's, growth of the deficit goes up under Republicans, down under Democrats.

Gone up bigly under current administration.

One of my favorite political quotes ever: When it comes to the federal budget Democrats like to buy stuff with other people's money. Republicans like to buy stuff and not pay for it.

I have thought it reasonable to have a single max total amount tax deferrable for retirement.

Remove the penalties for those without access to employer provided plans.

$20k/filer via any vehicle (or something like that).

That’s a good idea, though I would argue for a higher limit. Saving for retirement shouldn’t be so ridiculously complex in terms of legal mechanisms to do so. I’m currently contributing to 4 different numerical alphabetic combinations. I just hope I don’t die before I retire and can consolidate as my spouse has no interest in this stuff.