Author Topic: Fiscal cliff  (Read 47895 times)

DocCyane

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Fiscal cliff
« on: November 28, 2012, 05:45:58 AM »
I know just enough about the fiscal cliff to understand there's no good way out of our debt situation. Spending must decrease and taxes must increase. It's just a matter of how much, for whom and when.

As a single person with no kids nor house, I already get hit heavily on taxes. They say we could expect to pay another $3k a year, which would greatly impact my ability to save.

Does anyone have thoughts on the situation? Are you preparing to hand over more of your money in taxes?

sherr

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Re: Fiscal cliff
« Reply #1 on: November 28, 2012, 07:10:11 AM »
My opinion is that it's unlikely that we will be actually affected by the tax increases, at least for very long. The politicians will delay for as long as possible to haggle over every little thing to get things as much their way as possible, but in the end they will almost surely renew most of the tax cuts (at least the ones that affect the middle class) that are expiring. The specifics on how much you might end up paying extra on taxes varies depending on your situation, wikipedia has a simple chart that should give you a general idea: http://en.wikipedia.org/wiki/United_States_fiscal_cliff#Effects_of_tax_increases

If you are making less that $50k then the tax increases would not affect you very much. If you are making more than $50k then there probably is a lot of room in your life to cut back on things you don't truly need and be happier as a result.

One of the things I really like about MrMoneyMustache over other financial websites is that his philosophy is very flexible and drives me personally to improve my situation in ways I had not considered before. Living below your means gives you an incredible amount of flexibility to handle whatever gets thrown your way, be it additional taxes or anything else. That flexibility translates directly into greater security and greater peace of mind. While I think that the "fiscal cliff" will be a non-issue a year from now, I know I'll be okay regardless of what happens.

jrhampt

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Re: Fiscal cliff
« Reply #2 on: November 28, 2012, 07:13:53 AM »
Most of the tax increases are for households making over 250k a year, or singles making over 200k per year (aside from the issue of why a married couple only gets to make 50k more than the single person, which annoys me, we are still under this threshold, as are most people).  What's most likely to hit people under that threshold is the expiration of the 2% payroll tax cut, so I do expect my SS deductions to increase again next year.  Other than that, a few months back I had some extra to invest, which I put into muni bonds instead of piling more into dividend stocks.  I think that was a good move because others seem to be concerned about rising taxes on dividends, so now even though my S&P 500 fund is down, oddly enough the capital gains (!) in my muni bond fund are offsetting those losses right now.

iamlindoro

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Re: Fiscal cliff
« Reply #3 on: November 28, 2012, 09:31:14 AM »
To be honest, living a fairly mustachian lifestyle (though I could always be better-- I should probably be biking to work more and I do live in a high-cost housing market) and putting away ~65% of my takehome pay, I am salivating at the thought of fiscal cliff chaos, though only short term.  I hope that the two parties manage to bumble and argue their way right to the precipice, or even off of it, only averting disaster at the last second, so that I can maximize my benefit as I cram every penny I can scrounge up into the market.  I am actually trying to up my timed investments for the rest of the year with every spare penny I can find.  For the long term investor, the weak willed and fearful are providing us with a wonderful buying opportunity.

Edit:  The above obviously only pertains to the short term uncertainty about the Fiscal Cliff.  I personally think a deal will be reached that leaves middle class tax rates at nominally the same level.  But for me, the more eleventh hour that deal, the better.
« Last Edit: November 28, 2012, 09:49:28 AM by iamlindoro »

Jack

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Re: Fiscal cliff
« Reply #4 on: November 28, 2012, 10:44:11 AM »
Most of the tax increases are for households making over 250k a year, or singles making over 200k per year (aside from the issue of why a married couple only gets to make 50k more than the single person, which annoys me, we are still under this threshold, as are most people).

Isn't that what "married filing separately" is for?

jrhampt

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Re: Fiscal cliff
« Reply #5 on: November 28, 2012, 11:02:18 AM »
Isn't that what "married filing separately" is for?

I'm not sure that if it works that way or not, but I do know that when I first got married, I discovered that there were a lot of deductions you can't take unless you file jointly (student loans interest, mortgage interest, etc.).

bo_knows

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Re: Fiscal cliff
« Reply #6 on: November 28, 2012, 11:06:04 AM »
Being in the defense industry, this sequestration shenanigans really scares me.  Might be time for a new career...

tooqk4u22

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Re: Fiscal cliff
« Reply #7 on: November 28, 2012, 11:49:32 AM »
Isn't that what "married filing separately" is for?

I'm not sure that if it works that way or not, but I do know that when I first got married, I discovered that there were a lot of deductions you can't take unless you file jointly (student loans interest, mortgage interest, etc.).

Filing separately is usually for divorce/separation situations and when spouses are trying to keep their tax liabilities separate.  Limits are generally the same but there are lower deduction/phase out levels when filing separately.  Generally if you are married filing separately is not the way to go.

tooqk4u22

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Re: Fiscal cliff
« Reply #8 on: November 28, 2012, 11:50:35 AM »
Being in the defense industry, this sequestration shenanigans really scares me.  Might be time for a new career...

I don't think so, defense isn't going anywhere....although you may need to adjust your expectations for income and benefits a bit.

bo_knows

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Re: Fiscal cliff
« Reply #9 on: November 28, 2012, 12:15:01 PM »
Being in the defense industry, this sequestration shenanigans really scares me.  Might be time for a new career...

I don't think so, defense isn't going anywhere....although you may need to adjust your expectations for income and benefits a bit.

I think you'd be surprised how much the prospect of a $600B cut will scare off new contracts and give the possibility for job layoffs.  It's been a weird setting here for the past 6 months.

chucklesmcgee

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Re: Fiscal cliff
« Reply #10 on: November 28, 2012, 06:33:43 PM »
Does anyone have thoughts on the situation? Are you preparing to hand over more of your money in taxes?

I think a deal will be hammered out before the end of the year or shortly after. There will be a lot of hemming and hawing and some wild fluctuations in the market. The market starting to tank might actually force a deal to finalize. Then I think everything will more or less stabilize for the next year or so.

I do expect to hand over a good bit more in taxes, an additional 5-15% of my income depending on how deductions go. Not terribly concerned as I'm saving well above that. What's more disconcerting is that this really won't address the underlying budget concerns. I can't imagine much more than a tip of the hat in terms of tax increases and spending cuts. We'll still be racking up major deficits and have massive liabilities for ever increasing entitlement spending. At some point, 10+ years probably, it's going to become mathematically impossible to make the minimum interest payments on our debt, and that interest rate on new bonds is going to have to go way up as we get less and less stable. The solutions out of that are much higher taxes, higher inflation through printing more money or serious cuts to entitlement.

Politics aside, I think we can all agree that there will have to be some pretty drastic changes in the next few years or we're in serious doodoo.

James

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Re: Fiscal cliff
« Reply #11 on: November 28, 2012, 06:49:25 PM »
Politics aside, I think we can all agree that there will have to be some pretty drastic changes in the next few years or we're in serious doodoo.


Unfortunately I don't think this is the case.  We can pull a Greece or Japan and milk things another decade until we are borrowing 200% of GDP and run off a much bigger cliff...

chucklesmcgee

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Re: Fiscal cliff
« Reply #12 on: November 28, 2012, 07:51:39 PM »
Politics aside, I think we can all agree that there will have to be some pretty drastic changes in the next few years or we're in serious doodoo.


Unfortunately I don't think this is the case.  We can pull a Greece or Japan and milk things another decade until we are borrowing 200% of GDP and run off a much bigger cliff...

Guess it depends how serious doodoo is. I'd consider 25% unemployment or 2 decades of contraction and sluggish growth doodoo. You're right that we could still be solvent in 10 years time, possibly a bit longer.

tooqk4u22

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Re: Fiscal cliff
« Reply #13 on: November 29, 2012, 10:43:52 AM »
The cliff will be temporarily solved, which will result in delaying the inevtible and ensuring further uncertainty in the markets and overall economy. If they raise taxes or cut spending or do nothing and call it long term fine then everybody can adjust and manage to the new norm, but what has been the problem and will be the problem is that nobody can manage to absolute uncertainty every 6-12 months - that is the main issue. Unfortunately the dopes in DC aren't bright enought to screw in a light bulb so if nothing else plan for more uncertainty. 

MrChanticleer

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Re: Fiscal cliff
« Reply #14 on: November 29, 2012, 01:02:08 PM »
I've stopped paying attention to this kind of stuff for the most part. It seems like there is always some "big crisis" or catastrophe looming, and the media and politicians talk, and talk, and talk about it and then it just "gets fixed" and everything stays the same. Remember the debt ceiling thing?

After the "Fiscal cliff" (who names these crises anyway?) thing has come and gone, I guaranty some other thing will pop up that is super urgent.

smedleyb

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Re: Fiscal cliff
« Reply #15 on: November 29, 2012, 01:11:32 PM »
I've stopped paying attention to this kind of stuff for the most part. It seems like there is always some "big crisis" or catastrophe looming, and the media and politicians talk, and talk, and talk about it and then it just "gets fixed" and everything stays the same. Remember the debt ceiling thing?

After the "Fiscal cliff" (who names these crises anyway?) thing has come and gone, I guaranty some other thing will pop up that is super urgent.

Well said.   




tooqk4u22

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Re: Fiscal cliff
« Reply #16 on: November 29, 2012, 01:33:20 PM »
I've stopped paying attention to this kind of stuff for the most part. It seems like there is always some "big crisis" or catastrophe looming, and the media and politicians talk, and talk, and talk about it and then it just "gets fixed" and everything stays the same. Remember the debt ceiling thing?

After the "Fiscal cliff" (who names these crises anyway?) thing has come and gone, I guaranty some other thing will pop up that is super urgent.

Well lets be clear though that the "Fiscal Cliff" was the result of failed negotiations on the "Debt Ceiling" so nothing changed or got fixed and it only resulted in continued uncertainty.

MrChanticleer

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Re: Fiscal cliff
« Reply #17 on: November 29, 2012, 03:32:54 PM »
Well lets be clear though that the "Fiscal Cliff" was the result of failed negotiations on the "Debt Ceiling" so nothing changed or got fixed and it only resulted in continued uncertainty.

Exactly. That's why "gets fixed" is in quotes. (I guess the sarcasm didn't come across very well.)

My point is that as far as the public discourse is concerned, the crises get resolved just enough to stop worrying about it for a little while, and as you said, nothing changes.

I will be stunned if any real long term solution to the "cliff" problem gets implemented. It won't. Instead, there will be another band-aid style temporary solution and the can will get kicked again.

Sylly

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Re: Fiscal cliff
« Reply #18 on: November 29, 2012, 04:40:07 PM »
Isn't that what "married filing separately" is for?

I'm not sure that if it works that way or not, but I do know that when I first got married, I discovered that there were a lot of deductions you can't take unless you file jointly (student loans interest, mortgage interest, etc.).

Don't really know anything about availability of deductions, but the "penalty" is part of the brackets itself, though only if you're at least at the upper part of the 25% bracket as singles (and then it grows with income). For example, for a couple with $80k each of taxable income and standard deductions, as singles they don't break into the 28% bracket, but as a married couple $17.3k of their income is taxed at 28% instead of 25%. Hurray for a tax system that dis-incentivize marriage.


TLV

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Re: Fiscal cliff
« Reply #19 on: November 29, 2012, 05:39:40 PM »
Hurray for a tax system that dis-incentivize marriage.

It is a dis-incentive for couples where both are earning similar amounts. For couples where one is earning significantly more income than the other (e.g. one is a stay-at-home parent), it's a big incentive to get married.

I know a guy at work who played the system pretty well - he and his girlfriend put off their marriage for years while they were both working high-paying jobs, and then when they decided to start having kids and she would stay home with them they got married. They saved literally tens of thousands in taxes each year that way.

jrhampt

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Re: Fiscal cliff
« Reply #20 on: November 30, 2012, 07:49:38 AM »
Hurray for a tax system that dis-incentivize marriage.

It is a dis-incentive for couples where both are earning similar amounts. For couples where one is earning significantly more income than the other (e.g. one is a stay-at-home parent), it's a big incentive to get married.

I know a guy at work who played the system pretty well - he and his girlfriend put off their marriage for years while they were both working high-paying jobs, and then when they decided to start having kids and she would stay home with them they got married. They saved literally tens of thousands in taxes each year that way.

Yeah, I really should have thought about this more before we decided to get married - we make about the same income and are now in the 28% bracket.  Boo.  I sometimes joke that we should think about getting a divorce for tax reasons.

jrhampt

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Re: Fiscal cliff
« Reply #21 on: November 30, 2012, 07:56:54 AM »
Don't really know anything about availability of deductions, but the "penalty" is part of the brackets itself, though only if you're at least at the upper part of the 25% bracket as singles (and then it grows with income). For example, for a couple with $80k each of taxable income and standard deductions, as singles they don't break into the 28% bracket, but as a married couple $17.3k of their income is taxed at 28% instead of 25%. Hurray for a tax system that dis-incentivize marriage.

I wonder if they'll re-design the tax code now that traditional gender rules have evolved somewhat?

As for the fiscal cliff, totally agree with tooqk4u22 that it's the roller-coaster uncertainty that's such a problem for the markets.  We saw it last summer with the debt ceiling, and it continues...

COguy

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Re: Fiscal cliff
« Reply #22 on: November 30, 2012, 10:31:54 AM »
I imagine I have a poor understanding of economics and investing compared to some of the very informed people on here, but whenever I hear of the fiscal cliff, I always think of this article by MMM

http://www.mrmoneymustache.com/2011/08/12/current-events-in-stupidland/

Basically,
"A people who spend so carelessly that they are always within $1000 of doom is going to have a very short-term view of the country’s future. Even a slight change in the price of gasoline, or corn, or other world commodities, or a recession, can send them down in flames."

It seems that everyone wants a quick fix and that is most likely what we will get...followed by another quick fix.  Personally, I try not to worry and keep saving and trying to acquire new skills.  I have shoes on my feet and ample food.  Many people around the world do not have that.

freelancerNfulltimer

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Re: Fiscal cliff
« Reply #23 on: November 30, 2012, 11:37:01 AM »


If you are making less that $50k then the tax increases would not affect you very much. If you are making more than $50k then there probably is a lot of room in your life to cut back on things you don't truly need and be happier as a result.



I find this comment repugnant. What do you know about what does and doesn't bring me happiness? It shows a true naivety about what turns the economic handle. I work my booty off to earn over $50,000 so I can enjoy the things I use my money for. My income is a new accomplishment that I have been steadily working towards since I got out of college. I say no to many things so I can spend my time increasing my earning potential both through working more and accumulating additional skills and building a more impressive portfolio while my friends go out and party and booze it up. Now I make more money then a lot of my peers. But I made the sacrifices necessary to do that. I spend the money on the things that I enjoy. I like a new dress I buy it. I'm sure the retail clerk appreciate that I shop at their store helping to keep them employed. I spend a great portion of my disposable income to keep and ride my horse. I'm sure the barn owner appreciates the board and lesson money that keeps her business going. I'm sure the farrier appreciate my business every six weeks. I'm sure the Vet appreciates my business. My disposable income (and every one else's) is what fuels the economic motor. When and if I get hit with higher taxes I'm going to have to find a way to cut back (as will many people) which is going to SHRINK the economy and hurt jobs. Who is going to have to go out of business? When I have to cut back on the farrier visits to every 9 weeks instead of every 6 weeks for example. The cumulative effect off so many people like me cutting back is going to hurt the economy. That means the hardworking farrier and other businesses people like him will have less money of their own.

sol

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Re: Fiscal cliff
« Reply #24 on: November 30, 2012, 12:05:51 PM »
As a federal employee I've already endured three years of frozen pay and reduced retirement benefits. The sequester would cut our agency budget by ten to fifteen percent and continue the current hiring freeze.

We have way too much work and not enough people to do it, and an aging workforce that is rapidly diminishing due to retirements. Morale is low because of looming additional cuts on top of some hard years. I no longer recommend a career in public service to anyone, just because the current political climate makes it so clear that we are not valued.
Respect is the only incentive for federal employees because you  make SO much more money in the private sector. Take away that respect and what's left to keep even more people jumping ship?

The current divided Congress already controls what happens to your tax rates. How would you feel if they also
controlled your salary?  Here's a hint; they don't care how awesome you are at your job.
« Last Edit: November 30, 2012, 12:44:34 PM by sol »

Ozstache

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Re: Fiscal cliff
« Reply #25 on: November 30, 2012, 12:43:45 PM »
I work my booty off to earn over $50,000 so I can enjoy the things I use my money for.

I think you got off the internet at the wrong station. Complainypants and consumerism are much further down the line.

tooqk4u22

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Re: Fiscal cliff
« Reply #26 on: November 30, 2012, 01:24:43 PM »


If you are making less that $50k then the tax increases would not affect you very much. If you are making more than $50k then there probably is a lot of room in your life to cut back on things you don't truly need and be happier as a result.



I find this comment repugnant. What do you know about what does and doesn't bring me happiness? It shows a true naivety about what turns the economic handle. I work my booty off to earn over $50,000 so I can enjoy the things I use my money for. My income is a new accomplishment that I have been steadily working towards since I got out of college. I say no to many things so I can spend my time increasing my earning potential both through working more and accumulating additional skills and building a more impressive portfolio while my friends go out and party and booze it up. Now I make more money then a lot of my peers. But I made the sacrifices necessary to do that. I spend the money on the things that I enjoy. I like a new dress I buy it. I'm sure the retail clerk appreciate that I shop at their store helping to keep them employed. I spend a great portion of my disposable income to keep and ride my horse. I'm sure the barn owner appreciates the board and lesson money that keeps her business going. I'm sure the farrier appreciate my business every six weeks. I'm sure the Vet appreciates my business. My disposable income (and every one else's) is what fuels the economic motor. When and if I get hit with higher taxes I'm going to have to find a way to cut back (as will many people) which is going to SHRINK the economy and hurt jobs. Who is going to have to go out of business? When I have to cut back on the farrier visits to every 9 weeks instead of every 6 weeks for example. The cumulative effect off so many people like me cutting back is going to hurt the economy. That means the hardworking farrier and other businesses people like him will have less money of their own.


Blah blah blah, you are some damn sensitive - just kidding.  Besides none of the matters because you have transcended entitlement so whatever you have the government is entitled to take to give back to the entitled. 


Jack

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Re: Fiscal cliff
« Reply #27 on: November 30, 2012, 01:28:36 PM »


If you are making less that $50k then the tax increases would not affect you very much. If you are making more than $50k then there probably is a lot of room in your life to cut back on things you don't truly need and be happier as a result.



I find this comment repugnant. What do you know about what does and doesn't bring me happiness? It shows a true naivety about what turns the economic handle. I work my booty off to earn over $50,000 so I can enjoy the things I use my money for. My income is a new accomplishment that I have been steadily working towards since I got out of college. I say no to many things so I can spend my time increasing my earning potential both through working more and accumulating additional skills and building a more impressive portfolio while my friends go out and party and booze it up. Now I make more money then a lot of my peers. But I made the sacrifices necessary to do that. I spend the money on the things that I enjoy. I like a new dress I buy it. I'm sure the retail clerk appreciate that I shop at their store helping to keep them employed. I spend a great portion of my disposable income to keep and ride my horse. I'm sure the barn owner appreciates the board and lesson money that keeps her business going. I'm sure the farrier appreciate my business every six weeks. I'm sure the Vet appreciates my business. My disposable income (and every one else's) is what fuels the economic motor. When and if I get hit with higher taxes I'm going to have to find a way to cut back (as will many people) which is going to SHRINK the economy and hurt jobs. Who is going to have to go out of business? When I have to cut back on the farrier visits to every 9 weeks instead of every 6 weeks for example. The cumulative effect off so many people like me cutting back is going to hurt the economy. That means the hardworking farrier and other businesses people like him will have less money of their own.

I don't know about y'all, but I have a strong urge to cross-post this to the "Antimustachian Wall of Shame and Comedy" subforum.

iamlindoro

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Re: Fiscal cliff
« Reply #28 on: November 30, 2012, 01:30:07 PM »


If you are making less that $50k then the tax increases would not affect you very much. If you are making more than $50k then there probably is a lot of room in your life to cut back on things you don't truly need and be happier as a result.



I find this comment repugnant. What do you know about what does and doesn't bring me happiness? It shows a true naivety about what turns the economic handle. I work my booty off to earn over $50,000 so I can enjoy the things I use my money for. My income is a new accomplishment that I have been steadily working towards since I got out of college. I say no to many things so I can spend my time increasing my earning potential both through working more and accumulating additional skills and building a more impressive portfolio while my friends go out and party and booze it up. Now I make more money then a lot of my peers. But I made the sacrifices necessary to do that. I spend the money on the things that I enjoy. I like a new dress I buy it. I'm sure the retail clerk appreciate that I shop at their store helping to keep them employed. I spend a great portion of my disposable income to keep and ride my horse. I'm sure the barn owner appreciates the board and lesson money that keeps her business going. I'm sure the farrier appreciate my business every six weeks. I'm sure the Vet appreciates my business. My disposable income (and every one else's) is what fuels the economic motor. When and if I get hit with higher taxes I'm going to have to find a way to cut back (as will many people) which is going to SHRINK the economy and hurt jobs. Who is going to have to go out of business? When I have to cut back on the farrier visits to every 9 weeks instead of every 6 weeks for example. The cumulative effect off so many people like me cutting back is going to hurt the economy. That means the hardworking farrier and other businesses people like him will have less money of their own.

Ann, is that you?  How is Rafalka these days anyway?

http://www.newsy.com/videos/romney-s-dressage-horse-olympic-bound/

tooqk4u22

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Re: Fiscal cliff
« Reply #29 on: November 30, 2012, 01:31:04 PM »
As a federal employee I've already endured three years of frozen pay and reduced retirement benefits. The sequester would cut our agency budget by ten to fifteen percent and continue the current hiring freeze.

We have way too much work and not enough people to do it, and an aging workforce that is rapidly diminishing due to retirements. Morale is low because of looming additional cuts on top of some hard years. I no longer recommend a career in public service to anyone, just because the current political climate makes it so clear that we are not valued.
Respect is the only incentive for federal employees because you  make SO much more money in the private sector. Take away that respect and what's left to keep even more people jumping ship?

The current divided Congress already controls what happens to your tax rates. How would you feel if they also
controlled your salary?  Here's a hint; they don't care how awesome you are at your job.

Poor baby, here is a thought - then quit. Why haven't you - because government workers are not paid less than private sector equivelants and get ridiculously good benefits - so another 18 years of pay freezes may equalize that.

Yeah and generally they aren't required to be as productive as the private sector - so hiring freezes and attrition for a few more years may help to....I know it seems like your working your ass off but 1 private sector worker could probably accomplish the same amount as a it takes 3-5 government workers to accomplish in a day.


freelancerNfulltimer

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Re: Fiscal cliff
« Reply #30 on: November 30, 2012, 01:34:28 PM »


If you are making less that $50k then the tax increases would not affect you very much. If you are making more than $50k then there probably is a lot of room in your life to cut back on things you don't truly need and be happier as a result.



I find this comment repugnant. What do you know about what does and doesn't bring me happiness? It shows a true naivety about what turns the economic handle. I work my booty off to earn over $50,000 so I can enjoy the things I use my money for. My income is a new accomplishment that I have been steadily working towards since I got out of college. I say no to many things so I can spend my time increasing my earning potential both through working more and accumulating additional skills and building a more impressive portfolio while my friends go out and party and booze it up. Now I make more money then a lot of my peers. But I made the sacrifices necessary to do that. I spend the money on the things that I enjoy. I like a new dress I buy it. I'm sure the retail clerk appreciate that I shop at their store helping to keep them employed. I spend a great portion of my disposable income to keep and ride my horse. I'm sure the barn owner appreciates the board and lesson money that keeps her business going. I'm sure the farrier appreciate my business every six weeks. I'm sure the Vet appreciates my business. My disposable income (and every one else's) is what fuels the economic motor. When and if I get hit with higher taxes I'm going to have to find a way to cut back (as will many people) which is going to SHRINK the economy and hurt jobs. Who is going to have to go out of business? When I have to cut back on the farrier visits to every 9 weeks instead of every 6 weeks for example. The cumulative effect off so many people like me cutting back is going to hurt the economy. That means the hardworking farrier and other businesses people like him will have less money of their own.

Ann, is that you?  How is Rafalka these days anyway?

http://www.newsy.com/videos/romney-s-dressage-horse-olympic-bound/

Give me a break, like Ann Romney frequents these boards. I can appreciate being financially smart and living in a way to retire early and still understand how a capitalist economy world works.

freelancerNfulltimer

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Re: Fiscal cliff
« Reply #31 on: November 30, 2012, 01:36:28 PM »
I work my booty off to earn over $50,000 so I can enjoy the things I use my money for.

I think you got off the internet at the wrong station. Complainypants and consumerism are much further down the line.

I fully understand what this board is about. But I don't see how learning how to use my money to it's best advantage, spending less, working towards retirement means I should be FINE with my taxes being raised. When we tighten our belt because we want to save that one thing, when you're forced to tighten it because of higher taxes that's quite another.

iamlindoro

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Re: Fiscal cliff
« Reply #32 on: November 30, 2012, 01:46:04 PM »
I work my booty off to earn over $50,000 so I can enjoy the things I use my money for.

I think you got off the internet at the wrong station. Complainypants and consumerism are much further down the line.

I fully understand what this board is about. But I don't see how learning how to use my money to it's best advantage, spending less, working towards retirement means I should be FINE with my taxes being raised. When we tighten our belt because we want to save that one thing, when you're forced to tighten it because of higher taxes that's quite another.

Actually, I think the fact that you spend an appreciable amount on keeping, feeding, and maintaining a horse, as well as the fact that you have a "see it-like it-buy it" attitude about dresses is an indication that you could more easily weather a tax increase than most.  I'll totally concede that the spending less affects those who are poor in the end, evidence shows that the majority of the rich in this country accumulate without "distributing it into the economy."  It's the people living like they're rich who spread the wealth around by foolishly spending.  The majority of the rich in this country, by and large, live comparatively spartan lives*, sit on their wealth once they've got it, and don't indulge in expensive hobbies like cars, boats, travel, or horse ownership.

Disclaimer:  I'm a liberal who *does* think the wealthy should be paying quite a bit more in taxes, and that their deductions should be limited.  Those same taxes could be applied to me, and I would consider it money well spent to keep our system stable.  I believe middle class tax rates should remain the same, and that deduction caps should be kept at a level that it affects few or none of the middle class.

*Ref:  The Millionaire Next Door. http://www.amazon.com/The-Millionaire-Next-Door-Surprising/dp/1589795474

Jack

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Re: Fiscal cliff
« Reply #33 on: November 30, 2012, 01:56:22 PM »
I fully understand what this board is about. But I don't see how learning how to use my money to it's best advantage, spending less, working towards retirement means I should be FINE with my taxes being raised.

So you agree that it's important to manage your own finances responsibly, but you object to allowing the government to do the same? You don't see how that's just a teensy bit hypocritical?

sherr

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Re: Fiscal cliff
« Reply #34 on: November 30, 2012, 01:59:41 PM »
I work my booty off to earn over $50,000 so I can enjoy the things I use my money for.

I think you got off the internet at the wrong station. Complainypants and consumerism are much further down the line.

I fully understand what this board is about. But I don't see how learning how to use my money to it's best advantage, spending less, working towards retirement means I should be FINE with my taxes being raised. When we tighten our belt because we want to save that one thing, when you're forced to tighten it because of higher taxes that's quite another.

No one (myself included) likes having less money to spend / save because the government decided to take a bigger cut. However the point I was trying to make is that if they *do* take a bigger cut, it's not like I'm going to starve or anything.

Mustachianism is not just about learning financial tricks or frugality methods for the express purpose of being able to spend a ton of money down the road. The frugality goes hand-in-hand with the recognition that *things* in general don't make you happy, and that training yourself to value people, skills, and a simple life can pay off in spades of happiness. It's a topic that MrMoneyMustache has addressed several times, but here is one example if you want to see where I'm coming from: http://www.mrmoneymustache.com/2011/10/22/what-is-hedonic-adaptation-and-how-can-it-turn-you-into-a-sukka/

I'm sorry I offended you, I guess I was assuming that the people on the MMM forums at least generally agreed with the MMM philosophy. No offence intended, and I did not mean to be disparaging against people who make over $50k and choose to spend it. I also make over $50k and lead what many people would consider to be a very comfortable lifestyle, but this blog has woken me up to the possibilities of happiness and self-betterment that are unrelated to how much money you can make or spend.

iamlindoro

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Re: Fiscal cliff
« Reply #35 on: November 30, 2012, 02:01:22 PM »
I should clarify a little further from my above post:  If the argument is that taxing the rich more will affect their spending habits, the fact is that it's (by and large) not true from a statistical point of view.  The very wealthy tend to spend less, not more.  The fuel of our consumer economy is those in the middle class with out of control spending habits.

If there is a tax increase on the wealthy (those making $250K or more a year), it is on the people who statistically tend to spend *less*, not more.

Those who spend the most actually tend to not be wealthy (and their spending is the reason why) and thus would generally not be the ones with the higher proposed tax rate.  Those people can feel free to keep spending unchecked and filling the coffers of the accumulating wealthy.

If one is part of the very small minority of the wealthy who spend their money unchecked, such that a 4-5% tax increase affects their ability to purchase luxuries, this will be a golden opportunity for them to learn how the really rich stay rich-- by modifying their behavior and habits until a bump in the road like 4% on new earnings isn't even a blip on the radar.

tooqk4u22

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Re: Fiscal cliff
« Reply #36 on: November 30, 2012, 02:13:08 PM »
I work my booty off to earn over $50,000 so I can enjoy the things I use my money for.

I think you got off the internet at the wrong station. Complainypants and consumerism are much further down the line.

I fully understand what this board is about. But I don't see how learning how to use my money to it's best advantage, spending less, working towards retirement means I should be FINE with my taxes being raised. When we tighten our belt because we want to save that one thing, when you're forced to tighten it because of higher taxes that's quite another.

+1

Actually, I think the fact that you spend an appreciable amount on keeping, feeding, and maintaining a horse, as well as the fact that you have a "see it-like it-buy it" attitude about dresses is an indication that you could more easily weather a tax increase than most.

Don't recall spending being completely banned by the MMM blog/forum, please correct me if I am wrong.  And besides because she can buy a dress she should be taxed more....fuck that. Nevermind that MMM has demonstrated that a family, let alone an individual, can live reasonably well evan at the poverty line.  So your argument is a bit disingenuous.

Disclaimer:  I'm a liberal who *does* think the wealthy should be paying quite a bit more in taxes, and that their deductions should be limited.  Those same taxes could be applied to me, and I would consider it money well spent to keep our system stable.  I believe middle class tax rates should remain the same, and that deduction caps should be kept at a level that it affects few or none of the middle class.

I don't think you really needed a disclaimer to state your side.  Clearly I don't need a disclaimer to say that I am not on your side....that said I don't think taxes should go up but I do think they can.  I also think spending needs to go down - remember the fight going on right now is that liberals want taxes to go up on the wealthy (i.e. middle class and above) and are offering up zero spending cuts.  Republicans are now conceding some of this but want to see cuts. 

And lets be clear about what both sides considered to be cuts - cutting things out of the growth of future spending.  Example if budget today = $1 trillion.....projected budget 10 years from now = $3 trillion then cut so that budget 10 years from now is $2 trillion.....wow they just CUT the budget by a third by their rules. 

I SAY NO....a cut would be taking the budget today and making it $900 billion.....point is democrats can't even concede to making cuts that aren't even cuts.

My position is to simplify the tax code, raise revenue with a combination of higher rates and the simplification, and actual cuts. 

tooqk4u22

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Re: Fiscal cliff
« Reply #37 on: November 30, 2012, 02:16:40 PM »
I fully understand what this board is about. But I don't see how learning how to use my money to it's best advantage, spending less, working towards retirement means I should be FINE with my taxes being raised.

So you agree that it's important to manage your own finances responsibly, but you object to allowing the government to do the same? You don't see how that's just a teensy bit hypocritical?

The difference is the government spends like a drunk sailor and is completely mismanaging its finances by putting itself into a debt emergency.  If anything, the government is is completely anti-MMM.

tooqk4u22

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Re: Fiscal cliff
« Reply #38 on: November 30, 2012, 02:20:34 PM »
Mustachianism is not just about learning financial tricks or frugality methods for the express purpose of being able to spend a ton of money down the road. The frugality goes hand-in-hand with the recognition that *things* in general don't make you happy, and that training yourself to value people, skills, and a simple life can pay off in spades of happiness. It's a topic that MrMoneyMustache has addressed several times, but here is one example if you want to see where I'm coming from: http://www.mrmoneymustache.com/2011/10/22/what-is-hedonic-adaptation-and-how-can-it-turn-you-into-a-sukka/

I'm sorry I offended you, I guess I was assuming that the people on the MMM forums at least generally agreed with the MMM philosophy. No offence intended, and I did not mean to be disparaging against people who make over $50k and choose to spend it. I also make over $50k and lead what many people would consider to be a very comfortable lifestyle, but this blog has woken me up to the possibilities of happiness and self-betterment that are unrelated to how much money you can make or spend.

Yes and no.  Buying one dress after another for no reason is anti-mmm, but buying one that you really love, will use many times is not.  For crying out loud MMM has a $400k house and plenty of stuff.  So yes buying things for the sake of buying things will not make you happy, but deprivation is not the philosphy either.

iamlindoro

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Re: Fiscal cliff
« Reply #39 on: November 30, 2012, 02:24:18 PM »
Actually, I think the fact that you spend an appreciable amount on keeping, feeding, and maintaining a horse, as well as the fact that you have a "see it-like it-buy it" attitude about dresses is an indication that you could more easily weather a tax increase than most.

Don't recall spending being completely banned by the MMM blog/forum, please correct me if I am wrong.  And besides because she can buy a dress she should be taxed more....fuck that. Nevermind that MMM has demonstrated that a family, let alone an individual, can live reasonably well evan at the poverty line.  So your argument is a bit disingenuous.

Actually, that wasn't my point at all-- My point is that those at an income level that could be affected by the proposed tax increases, those making $250K or higher PER YEAR (decidedly not middle class), the statistical truth is that those people tend to spend less, not more.  The reality is that those driving the "economic engine" with large spending are the real middle class-- under $250K/year in income, and very little savings.  An increase in taxes on those who tend to spend less, and need less, is a blip to them.  Remember, it's a tax on INCOME, not on wealth.  Government agents are not going to break into your house and cart off anything you've already accumulated.

Since those who really fuel our economy with spending are those which *neither* side intends to increase taxes on, the net economic result will be little to none.

If you haven't read The Millionaire Next Door, I highly recommend it.  US Millionaires tend to drive old, used cars, drink Budweiser when they drink at all, wear a $30 Timex, and spend very, very little.  In other words, they're mustachians.

tooqk4u22

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Re: Fiscal cliff
« Reply #40 on: November 30, 2012, 02:52:35 PM »
Actually, that wasn't my point at all-- My point is that those at an income level that could be affected by the proposed tax increases, those making $250K or higher PER YEAR (decidedly not middle class), the statistical truth is that those people tend to spend less, not more.  The reality is that those driving the "economic engine" with large spending are the real middle class-- under $250K/year in income, and very little savings.  An increase in taxes on those who tend to spend less, and need less, is a blip to them.  Remember, it's a tax on INCOME, not on wealth.  Government agents are not going to break into your house and cart off anything you've already accumulated.

Since those who really fuel our economy with spending are those which *neither* side intends to increase taxes on, the net economic result will be little to none.

If you haven't read The Millionaire Next Door, I highly recommend it.  US Millionaires tend to drive old, used cars, drink Budweiser when they drink at all, wear a $30 Timex, and spend very, very little.  In other words, they're mustachians.

I agree with this premise that wealth do not spend more and more...but this is the part is was resonding to ......the fact that you have a "see it-like it-buy it" attitude about dresses is an indication that you could more easily weather a tax increase than most..  Although I disagree on the $250k threshold, it may not be decidedly middle class but it is definitely not wealthy - especially in high COL areas.

And I have read the millionaire next door and one part is they live a lower lifestyle then would be expected as you indicate but the other part is they are dispraportiantely willing to take risk by investing and being entreprenuers.  I don't beleive that they will stop investing overall but how they do it may change - it is all about risk vs. return and no sense taking the risk if the return is not there.

 


grantmeaname

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Re: Fiscal cliff
« Reply #41 on: December 01, 2012, 07:37:38 PM »
I don't beleive that they will stop investing overall but how they do it may change - it is all about risk vs. return and no sense taking the risk if the return is not there.
You've been repeating this one a lot lately. Why would the return not be there? Corporations get butthurt about taxes and stop producing things of value? Foreign governments stop investing in their nations' needs and don't issue any more bonds?

grantmeaname

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Re: Fiscal cliff
« Reply #42 on: December 01, 2012, 07:41:31 PM »
I fully understand what this board is about. But I don't see how learning how to use my money to it's best advantage, spending less, working towards retirement means I should be FINE with my taxes being raised.
There are people in this world who aren't as fortunate as you. It's just money, and you would be perfectly fine spending a little less of yours. I might not clear $14,000 this year and I have room in my budget for wind power, taxes, and even a little bit of charitable giving. Maybe instead of bitching that you can only make it to the farrier five times in 2013 instead of eight, you could try and take the big picture view and realize that taxes have an important societal function and are a necessary evil that prolongs our civilization and allows our prosperity? Or recognize that for your modest tax payment (dramatically lower than in any similar nation, of course), you get to participate in a dynamic and exciting society with unbelievable extravagance all around you?

Nah. Much easier to complain.

Another Reader

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Re: Fiscal cliff
« Reply #43 on: December 01, 2012, 07:47:39 PM »
Anyone that thinks more taxes will solve anything should work for a large government agency for a year.  Money is not the problem.  Waste, mismanagement and fraud are the problems.  We need less government, not more taxes.  I would be fine with paying more taxes if doing so would actually accomplish anything.  It would not.

smedleyb

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Re: Fiscal cliff
« Reply #44 on: December 02, 2012, 08:03:25 AM »
Fiscal cliff?  More like fiscal curb.  And nobody ever got hurt falling off a curb.

Like my boy Flav likes to say, don't believe the media and political hype. 

kolorado

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Re: Fiscal cliff
« Reply #45 on: December 02, 2012, 09:06:55 AM »
Fiscal cliff?  More like fiscal curb.  And nobody ever got hurt falling off a curb.

Like my boy Flav likes to say, don't believe the media and political hype.

My grandmother and my mother-in-law both were injured falling from crumbling curbs. It's costly and painful to have aged bones reset and rehabilitated. My MIL actually lost her ability to play the piano from her injury and my grandmother could no longer play her guitar or crochet.
Repercussions from failure to act on this "Fiscal Cliff" will hurt the vulnerable. We here may be snug in our financial preparedness and knowledge but we should not ignore the life changing potential for many other people out there.

grantmeaname

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Re: Fiscal cliff
« Reply #46 on: December 02, 2012, 09:12:38 AM »
Repercussions from failure to act on this "Fiscal Cliff" will hurt the vulnerable. We here may be snug in our financial preparedness and knowledge but we should not ignore the life changing potential for many other people out there.
I like the metaphor, but I don't think that you've really demonstrated that that's the case. Besides tentative, uneasy asset pricing for investors, how is this affecting the general population?

smalllife

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Re: Fiscal cliff
« Reply #47 on: December 02, 2012, 11:10:23 AM »
Besides tentative, uneasy asset pricing for investors, how is this affecting the general population?

If a deal is not reached on December 31, 2012, payroll companies will be legally required to deduct based on the then-expired tax cuts.  So it will affect the general population because . . . no more payroll tax holiday (SS back to 6.2% for employees) and all Bush tax cuts are no longer applicable = much lower paychecks on January 1, 2013. 

Given how Washington likes to do their negotiations that is a very real possibility and one that I bet most people don't realize.

grantmeaname

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Re: Fiscal cliff
« Reply #48 on: December 02, 2012, 11:42:37 AM »
So I should be concerned about a colossal 2% tax increase crushing the life out of blue-collar America?

Uh-huh.

smalllife

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Re: Fiscal cliff
« Reply #49 on: December 02, 2012, 11:55:45 AM »
So I should be concerned about a colossal 2% tax increase crushing the life out of blue-collar America?


No, it's not colossal, but that wasn't your question.  The bigger difference would be the complete expiration of Bush era tax cuts, which adjust the federal withholding tax table.  It won't affect those who live below their means, but it very well might affect the insane amount of Americans who live paycheck to paycheck and don't realize the guaranteed paycheck reduction if a solution is not found in time.