Author Topic: For folks that have Rothed out, do you now support income-based benefits?  (Read 1413 times)

swampwiz

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I was having a spirited Facebook discussion about how since I have already paid all the taxes I'm going to pay (less Social Security and a small employer pension, down the road) by converting everything over to a Roth, I find myself supporting political policies that give out stuff to "low income" folks, like the ACA and Guaranteed Income, since I am now "low-income" and won't be paying taxes, but would be feeding at the trough.  I also think this is a microcosm of the Social Security / Medicare question as the folks who detested paying taxes when they were earning income now sure love those government transfers now that they are eligible.

Spitfire

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People here who were high income and are now FIRE have (likely) paid a LOT of taxes in their working career. I would have no problem taking ACA benefits because the healthcare system is broken and way too costly. I would not be inclined to want a guaranteed income or food stamps if I was not working by choice. In general I support help that goes to people who work but are low income.   

mak1277

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I think most people choose the path that is most closely aligned with their own self interest at any given point in time.  I don't think that's immoral or wrong, at least on its face.

Schaefer Light

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I think most people choose the path that is most closely aligned with their own self interest at any given point in time.  I don't think that's immoral or wrong, at least on its face.

I agree with this.  I would certainly take advantage of any government assistance that I could legally get.  However, I also think that most people aren't going to be too happy to find out that policies that were intended to benefit low wage earners are also going to benefit early retirees who have over $1M saved for retirement.

DreamFIRE

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I was having a spirited Facebook discussion about how since I have already paid all the taxes I'm going to pay (less Social Security and a small employer pension, down the road) by converting everything over to a Roth, I find myself supporting political policies that give out stuff to "low income" folks, like the ACA and Guaranteed Income, since I am now "low-income" and won't be paying taxes, but would be feeding at the trough.  I also think this is a microcosm of the Social Security / Medicare question as the folks who detested paying taxes when they were earning income now sure love those government transfers now that they are eligible.

This is true.  In my case, Roth is only part of the picture as I have a lot in after-tax investments and cash equivalents where the actual taxable income is much less than what I will draw from the accounts to live on, therefore, being eligible for ACA subsidies.  Even though I'm not FIREd yet and have a long way to go until SS and Medicare, I support shoring up those programs, even if it means I have to pay higher taxes now.

kpd905

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A bit off topic, but if you converted everything, do you have some income coming in to at least take advantage of the standard deduction?
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mm1970

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The older I get the more I support these income-based benefits.

1.  I don't like it when people can't afford food, shelter, or healthcare.
2.  I like to think if I'm nearly destitute, there would be programs to help me out.
3.  I don't think it's a moral failing to be poor.

Raenia

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The older I get the more I support these income-based benefits.

1.  I don't like it when people can't afford food, shelter, or healthcare.
2.  I like to think if I'm nearly destitute, there would be programs to help me out.
3.  I don't think it's a moral failing to be poor.

+1 to all those.  I'm nowhere near done with paying taxes, and I'd happily pay more if it meant that everyone had access to basic healthcare without bankrupting themselves, and enough food for themselves and their families, working or not.  Yes, it's not in my immediate best interest, but I believe it would make society as a whole better for all of us.

Ryancanderson23

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I think most people choose the path that is most closely aligned with their own self interest at any given point in time.  I don't think that's immoral or wrong, at least on its face.

I think this is definitely immoral and wrong, even if it is natural.  Democracy collapses if this is strictly how people vote.  Democracy depends on some people voting by what they think is fair and best for fellow citizens regardless of how it effects them personally.  For example, if everyone was selfish, all you have to do is get a slight majority together (51%) and convince them to vote to take all of the resources of the minority and give them to the majority.   Or the majority could vote to make minority slaves to the majority. 

mak1277

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I think most people choose the path that is most closely aligned with their own self interest at any given point in time.  I don't think that's immoral or wrong, at least on its face.

I think this is definitely immoral and wrong, even if it is natural.  Democracy collapses if this is strictly how people vote.  Democracy depends on some people voting by what they think is fair and best for fellow citizens regardless of how it effects them personally.  For example, if everyone was selfish, all you have to do is get a slight majority together (51%) and convince them to vote to take all of the resources of the minority and give them to the majority.   Or the majority could vote to make minority slaves to the majority.

Acting immorally is wrong.  Acting selfishly is not immoral or wrong on its face.  You can act in your own self interests without acting immorally at the same time. 

SilveradoBojangles

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I actually think paying for social safety nets via taxes is in my best interest. More equitable societies are a lot more stable, because people do desperate things when they have nothing to lose. So I have zero problem paying taxes when they are used for domestic programs. Just because I'm not the one receiving assistance doesn't mean I'm not benefitting from them.




Cromacster

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A bit off topic, but if you converted everything, do you have some income coming in to at least take advantage of the standard deduction?

OP Can you explain what you mean by "Rothed Out"  Did you convert everything pretax in one lump?  Or you've been converting for enough over the years that it's now all out of pre tax accounts?  Or was your pretax account small to begin with?
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Ryancanderson23

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I think most people choose the path that is most closely aligned with their own self interest at any given point in time.  I don't think that's immoral or wrong, at least on its face.

I think this is definitely immoral and wrong, even if it is natural.  Democracy collapses if this is strictly how people vote.  Democracy depends on some people voting by what they think is fair and best for fellow citizens regardless of how it effects them personally.  For example, if everyone was selfish, all you have to do is get a slight majority together (51%) and convince them to vote to take all of the resources of the minority and give them to the majority.   Or the majority could vote to make minority slaves to the majority.

Acting immorally is wrong.  Acting selfishly is not immoral or wrong on its face.  You can act in your own self interests without acting immorally at the same time.

I agree that acting selfishly is not always immoral.  But in the context of only being in favor of social policies that are in your best interest is selfish and immoral.

starguru

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The problem is that in the US we don't do a very good means testing.  We income test, and by income I mean income from wages.  If we treated unearned income as regular income across the board (for tax and benefits purposes) and had a more complete view of overall wealth it would go a long way to fixing a lot of our problems (and probably introduce a few new ones at the same time).

mak1277

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I think most people choose the path that is most closely aligned with their own self interest at any given point in time.  I don't think that's immoral or wrong, at least on its face.

I think this is definitely immoral and wrong, even if it is natural.  Democracy collapses if this is strictly how people vote.  Democracy depends on some people voting by what they think is fair and best for fellow citizens regardless of how it effects them personally.  For example, if everyone was selfish, all you have to do is get a slight majority together (51%) and convince them to vote to take all of the resources of the minority and give them to the majority.   Or the majority could vote to make minority slaves to the majority.

Acting immorally is wrong.  Acting selfishly is not immoral or wrong on its face.  You can act in your own self interests without acting immorally at the same time.

I agree that acting selfishly is not always immoral.  But in the context of only being in favor of social policies that are in your best interest is selfish and immoral.

So if you're in the workforce and you are only in favor of policies that reduce you personal tax burden at the expense of social programs, but then you retire and are only in favor of policies that support people with no/low income at the expense of tax payers....are you immoral both times, or only one of the two?

Bucksandreds

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The older I get the more I support these income-based benefits.

1.  I don't like it when people can't afford food, shelter, or healthcare.
2.  I like to think if I'm nearly destitute, there would be programs to help me out.
3.  I don't think it's a moral failing to be poor.

+1 to all those.  I'm nowhere near done with paying taxes, and I'd happily pay more if it meant that everyone had access to basic healthcare without bankrupting themselves, and enough food for themselves and their families, working or not.  Yes, it's not in my immediate best interest, but I believe it would make society as a whole better for all of us.

+1000. The current Republican Party is immoral evil. I donít care if Iím changing the subject. Itís true.

Ryancanderson23

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IMO you are at least immoral one of the times and maybe both.  You should be in favor of what you think is most fair regardless of how it affects you.  There are policies that benefit the poor that I am in favor of even though I derive no benefit and it costs me more in taxes and there are some tax hikes for the rich that I am against even though it doesn't effect me.  There are also some policies that help me that I am also in favor of but not because they benefit me but because I believe they are fair and in the best interest of society in general.  And there are times when I am in favor of a policy solely because it benefits me even though it might not be best for society, but in those cases I am being selfish and immoral. 

Bucksandreds

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The problem is that in the US we don't do a very good means testing.  We income test, and by income I mean income from wages.  If we treated unearned income as regular income across the board (for tax and benefits purposes) and had a more complete view of overall wealth it would go a long way to fixing a lot of our problems (and probably introduce a few new ones at the same time).

+1. When Democrats take back over all income needs to be taxed the same. A .5% to 1% tax on wealth over a certain threshold will also be valuable in the future to deal with income inequality/reducing the deficit.

letired

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The older I get the more I support these income-based benefits.

1.  I don't like it when people can't afford food, shelter, or healthcare.
2.  I like to think if I'm nearly destitute, there would be programs to help me out.
3.  I don't think it's a moral failing to be poor.

+1 to all those.  I'm nowhere near done with paying taxes, and I'd happily pay more if it meant that everyone had access to basic healthcare without bankrupting themselves, and enough food for themselves and their families, working or not.  Yes, it's not in my immediate best interest, but I believe it would make society as a whole better for all of us.

+1 also! Stronger social programs protect me when I'm doing well and when I'm not. Its not that hard to have a string of bad luck, and I see social programs as being a little like insurance. I pay in now, and if it all goes to crap, it's there to catch me. What would I want to help me if I found myself in that position?

starguru

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The problem is that in the US we don't do a very good means testing.  We income test, and by income I mean income from wages.  If we treated unearned income as regular income across the board (for tax and benefits purposes) and had a more complete view of overall wealth it would go a long way to fixing a lot of our problems (and probably introduce a few new ones at the same time).

+1. When Democrats take back over all income needs to be taxed the same. A .5% to 1% tax on wealth over a certain threshold will also be valuable in the future to deal with income inequality/reducing the deficit.

It could also be a compromise point.  Get Republicans to agree to taxing all income the same, but in return agree to lower the rates so as to preserver or slightly increase or whatever the fuck they can agree to on overall spending.  Then the framework is in place to debate what to do with which social programs. 

starguru

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+1000. The current Republican Party is immoral evil. I donít care if Iím changing the subject. Itís true.

This thinking is the reason we have Donald Trump as President.  The polarization keeps getting worse and worse.  Instead of all being on the same team with different ideas, the other side (from you) is "100% pure evil", an enemy.  The more people that think like this the worse it will get.

swampwiz

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A bit off topic, but if you converted everything, do you have some income coming in to at least take advantage of the standard deduction?

I'm in the process of cleaning out my TIRA.  That, coupled with some securities outside of an IRA, might mean I run out of income to declare in 2022!  And if I'm flush enough to still have TIRA to convert in 2022, that must mean my investments will have done much better than I had expected, so I wouldn't have a problem with that!

I haven't had a federal tax bill over $1K since 2002.
« Last Edit: July 12, 2018, 03:48:39 PM by swampwiz »

swampwiz

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A bit off topic, but if you converted everything, do you have some income coming in to at least take advantage of the standard deduction?

OP Can you explain what you mean by "Rothed Out"  Did you convert everything pretax in one lump?  Or you've been converting for enough over the years that it's now all out of pre tax accounts?  Or was your pretax account small to begin with?

Rothed out means having no TIRA, only Roth; the idea is that FIRE folk take advantage of low tax rates to do Roth covnersion.  Folks who contribute in Roth are essentially Rothed from the beginning for that contribution.

swampwiz

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The problem is that in the US we don't do a very good means testing.  We income test, and by income I mean income from wages.  If we treated unearned income as regular income across the board (for tax and benefits purposes) and had a more complete view of overall wealth it would go a long way to fixing a lot of our problems (and probably introduce a few new ones at the same time).

Of course, that goes counter to the ideology of the "ownership society" and the idea that paying taxes once is enough.

Unearned income is still income for the purpose of income-based welfare.

Cromacster

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A bit off topic, but if you converted everything, do you have some income coming in to at least take advantage of the standard deduction?

OP Can you explain what you mean by "Rothed Out"  Did you convert everything pretax in one lump?  Or you've been converting for enough over the years that it's now all out of pre tax accounts?  Or was your pretax account small to begin with?

Rothed out means having no TIRA, only Roth; the idea is that FIRE folk take advantage of low tax rates to do Roth covnersion.  Folks who contribute in Roth are essentially Rothed from the beginning for that contribution.

Right, but roth conversions are done over many many years (assuming a large portion is saved in a 401k/Trad IRA), so to be rothed out would presumably take 10+ years.  I guess in your OP you make it sound like you did it in one lump, which is maybe why I am losing it.
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starguru

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The problem is that in the US we don't do a very good means testing.  We income test, and by income I mean income from wages.  If we treated unearned income as regular income across the board (for tax and benefits purposes) and had a more complete view of overall wealth it would go a long way to fixing a lot of our problems (and probably introduce a few new ones at the same time).

Of course, that goes counter to the ideology of the "ownership society" and the idea that paying taxes once is enough.

Unearned income is still income for the purpose of income-based welfare.
How do you mean?  How would taxing unearned income be a double tax?  I am aware of a few examples of double taxation but they are few and far between. 




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Bucksandreds

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+1000. The current Republican Party is immoral evil. I donít care if Iím changing the subject. Itís true.

This thinking is the reason we have Donald Trump as President.  The polarization keeps getting worse and worse.  Instead of all being on the same team with different ideas, the other side (from you) is "100% pure evil", an enemy.  The more people that think like this the worse it will get.

Itís one thing to claim that a party/ ideology is evil and another to claim that an individual person is. It is completely logical to see the evil in raising the deficit to fund a tax break for the rich, ripping infants from parents because theyíre on the wrong side of the border, inciting racial violence as Trump has repeatedly done, espousing sexual assault as Trump has bragged about. I would be part of the problem if I said that all republicans were evil which I neither believe nor espouse.

effigy98

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Unless I get a refund for the 100's of thousands I have paid in taxes, I 100% support low income subsidies. I plan on taking FULL advantage of them down to the free school lunches for the kids even though I will probably have 2m in investments by then. I will have zero bills in FI except maybe property taxes and cable because I plan on making the homestead 100% self sufficient (farm, solar, wind, watcher catchment, etc) and fun money so it will be very easy to adjust my income to the "sweet" spot and take advantage of every benefit I can get.

Davids

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I waver on this but screw it if you have paid your fair share then there is nothing wrong with reaping in on some of the govt benefits if it's perfectly legal.

Bucksandreds

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The problem is that in the US we don't do a very good means testing.  We income test, and by income I mean income from wages.  If we treated unearned income as regular income across the board (for tax and benefits purposes) and had a more complete view of overall wealth it would go a long way to fixing a lot of our problems (and probably introduce a few new ones at the same time).

Of course, that goes counter to the ideology of the "ownership society" and the idea that paying taxes once is enough.

Unearned income is still income for the purpose of income-based welfare.
How do you mean?  How would taxing unearned income be a double tax?  I am aware of a few examples of double taxation but they are few and far between. 




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kpd905

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A bit off topic, but if you converted everything, do you have some income coming in to at least take advantage of the standard deduction?

I'm in the process of cleaning out my TIRA.  That, coupled with some securities outside of an IRA, might mean I run out of income to declare in 2022!  And if I'm flush enough to still have TIRA to convert in 2022, that must mean my investments will have done much better than I had expected, so I wouldn't have a problem with that!

I haven't had a federal tax bill over $1K since 2002.

It just seems like a waste to convert everything and pay taxes now, when you could have a tax-free $12k income ($24k if married) with the standard deduction for the rest of your life.  Maybe I am missing something.
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jlcnuke

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I think it's morally wrong that the law currently has loopholes which allows government assistance designed for the poor to go to millionaires. I don't believe it is morally wrong to avail oneself of those loopholes however as the tax code is so convoluted that taking advantage of all beneficial parts of it is something that's almost necessary to balance out all the ways in which it is detrimental to many people.

I think everyone should be in favor of helping those in actual need, but opposed to government redistribution of wealth when not necessary for the good of society.
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jlcnuke

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A bit off topic, but if you converted everything, do you have some income coming in to at least take advantage of the standard deduction?

I'm in the process of cleaning out my TIRA.  That, coupled with some securities outside of an IRA, might mean I run out of income to declare in 2022!  And if I'm flush enough to still have TIRA to convert in 2022, that must mean my investments will have done much better than I had expected, so I wouldn't have a problem with that!

I haven't had a federal tax bill over $1K since 2002.

It just seems like a waste to convert everything and pay taxes now, when you could have a tax-free $12k income ($24k if married) with the standard deduction for the rest of your life.  Maybe I am missing something.

RMDs aren't applicable to Roth accounts is one thing you're not taking into consideration. A second is that some people can convert everything to a Roth and pay no taxes at all anyway.
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swampwiz

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A bit off topic, but if you converted everything, do you have some income coming in to at least take advantage of the standard deduction?

I'm in the process of cleaning out my TIRA.  That, coupled with some securities outside of an IRA, might mean I run out of income to declare in 2022!  And if I'm flush enough to still have TIRA to convert in 2022, that must mean my investments will have done much better than I had expected, so I wouldn't have a problem with that!

I haven't had a federal tax bill over $1K since 2002.

It just seems like a waste to convert everything and pay taxes now, when you could have a tax-free $12k income ($24k if married) with the standard deduction for the rest of your life.  Maybe I am missing something.

I have been converting at the 0% federal rate.  I've mentioned that I haven't paid more than $1K in federal tax since 2002, and have only paid like $50 a year for a few years when I took some TIRA distributions, and that was the 10% early penalty.  And I'll have SS and a small pension, along with some inherited TIRA, so I'll probably fill out the 0% tax bracket soon enough.

DreamFIRE

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I've mentioned that I haven't paid more than $1K in federal tax since 2002

When you said you were "now" low income in the OP, I thought you meant that was a more recent development.  But including all of 2002 through today?  That's 16 1/2 years of low income!