It was my conclusion that locking in a 28% tax rate was a bad idea for the majority of taxpayers. It was an anonymous commenter's opinion that I was a fool.
I therefore wish to factor in the tax codes of the 1970s and see what changes. I've used the average weekly wages as seen in the latest BLS employment report to generate the expected taxes if our tax code was the same now as it had been in 1970. This math is based on a single filer.
Even if the tax structure of the 1970s repeats, 18.7% is still less than 28%. Note that this analysis does not even factor in deductions and personal exemptions. That income isn't even taxed at all.
This notion that taxes for most people will rise in retirement is one of the biggest scams of the financial industry. That was my conclusion when I wrote the original post and that's still my opinion now. The gravestone stands.
See Also:
Silly Roth IRA Math
Source Data:
U.S. Federal Individual Income Tax Rates History, 1913-2010
BLS: Employment Situation Summary
St. Louis Fed: CPI-U
Now you know I have issues with math!
ReplyDeleteGYSC,
ReplyDeleteEveryone has issues with math at some point!
It is uncommon to fire all six shots of a revolver with great suddenness when one would probably be sufficient, but many things in the life of Herbert West were uncommon. - H.P. Lovecraft
I have a ripper of a post almost done, take a look!
ReplyDeleteGYSC,
ReplyDeleteYou don't really expect me to go looking for posts that are almost done do you?
Okay, okay. I looked. It wasn't posted yet though. Hahaha!
Its up smarta-----!
ReplyDeleteIm almost on vacatuon, cut me a break.