Middle Class Tax Trap?

[Tabaxus]

There's nothing wrong with trying to minimize your tax burden.  Anyone who pays more than a cent than they owe in taxes is being a little silly.  There's not necessarily anything wrong with advocating for tax reform, either, though the "I AM PAYING MORE THAN MY FAIR SHARE" crybaby stuff tends to highlight a blind spot to the bare-bones lives people who are "lucky enough" not to pay federal taxes (and sometimes state taxes, though this is less common) tend to lead. 

But get a little freaking perspective.  At the income level people are talking about in this thread as somehow not being middle class, you're making at least $40 an hour after taxes, even if you're in a high tax jurisdiction like Cal or NY.  Even adjusting that for the higher housing costs in Cal or NY, you're north of $20-30 as-adjusted for higher COL, per hour, after state/federal income taxes, FICA, medicare.  Don't cry about the reduction--you made the choice to live there.  If you can't market your skills for the same income elsewhere, then that's really what you're worth; if you can market your skills for the same income elsewhere, then do it.  Or accept your decision to effectively make less money to live where you want.

If you think that doesn't put you solidly in the upper class in this country, compared to the vast majority of people, you're out of your freaking mind.  $20-30 hour COL-adjusted post-tax is more than the vast, vast majority of people make, it gives you opportunities to save that very, very few people have, and it dramatically shortens the retirement runway (from the 25-30 years/entire adult life most people have to the  oh-my-goodness-world's-smallest-violin 8 years referenced in here).

Also, the idea that you're middle class because you work hard and want to provide for your family?  Are you kidding?  As someone said earlier in the thread, you can rename something if you'd like, I guess, but that doesn't make it so.

[bzzzt]

When did middle class solely start being determined on income, especially the median income? If we both lose our jobs and fall to the bottom quintile, are we considered poor? If our industries go through a labor growth period where wages stagnate or fall, can we be considered middle class again?

[Eric]

this post boggles my mind. I kind of hate throwing out numbers like this on the internet, but I grossed $180k in 2014 and I'm single with no kids and no mortgage. I'm pretty sure I know what it's like to pay "that kind of money" to the government, but the idea that there is anything "ohhh, poor me" about that scenario is seriously insane to me.

Its not a "poor me" thing, but more a "when is enough is enough" thing and a "is this really going to solve any problems" thing. 

So lets see, 180k, so your marginal rate is 28%, but i bet your effective rate is more like 20-23% especially if you are self employed, since you could effectively put 45k away in tax deferred retirement plans.  Plus the last 2 tax increases from Obama haven't affected you.  At all.  So your rates haven't gone up. 

Imagine someone saying you should pay 10% more.   Would you be happy writing an $18k check?  Do you feel your money would actually help anyone? 

I bet your perspective would change.  Even if it didn't, since raising taxes isnt going to fix any problems, there will be calls to raise them even more, so the next tax increase will change your perspective, or the one after that. 

Since there are so many people without savings out there, what if the plan was to tax savings, you know, to make things more fair?  Like 1% for anyone with more than 100k in the bank, back to the first dollar?  Would people care then?  Of course they would, because it would actually affect them.

Some perspective may help you too.  If you were born into any other country where you had the ability to make as much as you do here, you'd be paying a much higher tax rate.  If you were born into almost any other (modern) time period in this country, you'd be paying a much higher tax rate.  I understand if you think you're paying too much.  However, it's still a fact that taxes are at or close to an all time low for your income level, so you should understand if others feel like you're still getting a pretty good deal.

[NICE!]

Uh, you're rich. Pay taxes and quit complaining. Holy crap.

Sure, feel free to do what the tax code lets you do, but damn. Taxes are incredibly low in the US compared to the other places you'd be likely to live and work for that level of income.

First world problems.

[starguru]

this post boggles my mind. I kind of hate throwing out numbers like this on the internet, but I grossed $180k in 2014 and I'm single with no kids and no mortgage. I'm pretty sure I know what it's like to pay "that kind of money" to the government, but the idea that there is anything "ohhh, poor me" about that scenario is seriously insane to me.

Its not a "poor me" thing, but more a "when is enough is enough" thing and a "is this really going to solve any problems" thing. 

So lets see, 180k, so your marginal rate is 28%, but i bet your effective rate is more like 20-23% especially if you are self employed, since you could effectively put 45k away in tax deferred retirement plans.  Plus the last 2 tax increases from Obama haven't affected you.  At all.  So your rates haven't gone up. 

Imagine someone saying you should pay 10% more.   Would you be happy writing an $18k check?  Do you feel your money would actually help anyone? 

I bet your perspective would change.  Even if it didn't, since raising taxes isnt going to fix any problems, there will be calls to raise them even more, so the next tax increase will change your perspective, or the one after that. 

Since there are so many people without savings out there, what if the plan was to tax savings, you know, to make things more fair?  Like 1% for anyone with more than 100k in the bank, back to the first dollar?  Would people care then?  Of course they would, because it would actually affect them.

Some perspective may help you too.  If you were born into any other country where you had the ability to make as much as you do here, you'd be paying a much higher tax rate.  If you were born into almost any other (modern) time period in this country, you'd be paying a much higher tax rate.  I understand if you think you're paying too much.  However, it's still a fact that taxes are at or close to an all time low for your income level, so you should understand if others feel like you're still getting a pretty good deal.

I completely disagree.  What taxes rates are in other places doesn't mean it's right.  What they were historically doesn't make that right either. 

1)  Government spending is always more inefficient than private spending. 
2)  Many of our social welfare systems have massive fraud.  See this http://www.washingtonexaminer.com/report-massive-fraud-still-rampant-in-earned-income-tax-credit-program/article/2548376.
3)  You appeal to history; historically the median wage earners have had higher effective taxes too. See this http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=226.  So I suppose you will agree taxes should go up on medium income earners?
4)  You appeal to history; historically the lower wage earners have had higher effective taxes too. See this http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=226.  So I suppose you will agree taxes should go up on lower income earners?
5)  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  If you taxed the top 1% at 100% above a million dollars, there would still be massive deficits.  The problem is run away entitlements.
6)  This is a blog one of the main points of which is that as a society we consume too much.  If you want to address income inequality, convince people to save.  Give everyone a lesson on compound interest.  Require savings, like Australia does.  Saving $10/day (as i keep saying) over a traditional work career results in serious wealth if historical growth rates continue.
7)  Even if you think people shouldn't be expected to have minimal savings, there are better ways than taxes to address inequality.  The problem with inequality is this graph.  http://theglitteringeye.com/u-s-income-distributiona-chart-to-contemplate/.  The bulge needs to be more in the middle.  How about requiring companies to have a more even income distribution, especially if they are successful.  Companies that generate billions in profit should be required to distribute it more evenly.  This has the same effect as taking money away from the top, but it doesn't have the psychological effect of taxation.

[Norioch]

Its not a "poor me" thing, but more a "when is enough is enough" thing and a "is this really going to solve any problems" thing.

When the budget is balanced, that's enough. It's not impossible to balance the budget. It happened during the Clinton administration, in large part because taxes were higher. Yes, it will solve a problem, the problem being the budget deficit.

Imagine someone saying you should pay 10% more.   Would you be happy writing an $18k check?  Do you feel your money would actually help anyone?

Yes, I would be happy to pay an additional $18k. I'm not going to do it alone, but if it meant everybody else also paid an additional $18k, I'd be glad to do it. Yes, I do feel the money would actually help people, including myself.

Raising taxes on the highest earners will not solve our budget problems.

Not alone, but it's a step in the right direction. That's why I support raising taxes for almost everyone, not just the top 1%. FYI, I also support spending cuts.

[Eric]

Some perspective may help you too.  If you were born into any other country where you had the ability to make as much as you do here, you'd be paying a much higher tax rate.  If you were born into almost any other (modern) time period in this country, you'd be paying a much higher tax rate.  I understand if you think you're paying too much.  However, it's still a fact that taxes are at or close to an all time low for your income level, so you should understand if others feel like you're still getting a pretty good deal.

I completely disagree.  What taxes rates are in other places doesn't mean it's right.  What they were historically doesn't make that right either. 

snip

5)  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  If you taxed the top 1% at 100% above a million dollars, there would still be massive deficits.  The problem is run away entitlements.

starguru, you're arguing against a strawman here.  At no point did I even suggest anything should be changed.  I merely pointed out that you currently have a pretty sweet taxation rate compared to the rest of the (first) world and the rest of history.  So you could choose to complain about it or you could choose to embrace it.  I'm sure you know which I'd suggest.  :)

But regarding #5 -- I reject the general premise, as I don't believe we have a budget problem at all.  I realize the politicians want you to believe that (both sides), but if you judge them by their actions instead of their words, they don't believe it either.

[starguru]

Its not a "poor me" thing, but more a "when is enough is enough" thing and a "is this really going to solve any problems" thing.

When the budget is balanced, that's enough. It's not impossible to balance the budget. It happened during the Clinton administration, in large part because taxes were higher. Yes, it will solve a problem, the problem being the budget deficit.

Yup, and spending was less.  And taxes on everyone were higher.  so if you want to say everyone should pay more taxes, i'd agree with that.  Id stop blaming high earners though.

[dragoncar]

Some perspective may help you too.  If you were born into any other country where you had the ability to make as much as you do here, you'd be paying a much higher tax rate.  If you were born into almost any other (modern) time period in this country, you'd be paying a much higher tax rate.  I understand if you think you're paying too much.  However, it's still a fact that taxes are at or close to an all time low for your income level, so you should understand if others feel like you're still getting a pretty good deal.

I completely disagree.  What taxes rates are in other places doesn't mean it's right.  What they were historically doesn't make that right either. 

snip

5)  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  If you taxed the top 1% at 100% above a million dollars, there would still be massive deficits.  The problem is run away entitlements.

starguru, you're arguing against a strawman here.  At no point did I even suggest anything should be changed.  I merely pointed out that you currently have a pretty sweet taxation rate compared to the rest of the (first) world and the rest of history.  So you could choose to complain about it or you could choose to embrace it.  I'm sure you know which I'd suggest.  :)

But regarding #5 -- I reject the general premise, as I don't believe we have a budget problem at all.  I realize the politicians want you to believe that (both sides), but if you judge them by their actions instead of their words, they don't believe it either.

Dude, you reject a lot of general premises.

[Norioch]

1)  Government spending is always more inefficient than private spending.

From a utilitarian perspective, I disagree. The marginal utility of each dollar spent on the poor is so much higher than the marginal utility of each dollar spent on the rich, so government welfare programs for the poor contribute a great amount of utility, even with fraud and government bureaucracy. There's plenty of inefficiency in the government, but to declare the absolute that government spending is always more inefficient than private spending is ridiculous.

[starguru]

Some perspective may help you too.  If you were born into any other country where you had the ability to make as much as you do here, you'd be paying a much higher tax rate.  If you were born into almost any other (modern) time period in this country, you'd be paying a much higher tax rate.  I understand if you think you're paying too much.  However, it's still a fact that taxes are at or close to an all time low for your income level, so you should understand if others feel like you're still getting a pretty good deal.

I completely disagree.  What taxes rates are in other places doesn't mean it's right.  What they were historically doesn't make that right either. 

snip

5)  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  If you taxed the top 1% at 100% above a million dollars, there would still be massive deficits.  The problem is run away entitlements.

starguru, you're arguing against a strawman here.  At no point did I even suggest anything should be changed.  I merely pointed out that you currently have a pretty sweet taxation rate compared to the rest of the (first) world and the rest of history.  So you could choose to complain about it or you could choose to embrace it.  I'm sure you know which I'd suggest.  :)

But regarding #5 -- I reject the general premise, as I don't believe we have a budget problem at all.  I realize the politicians want you to believe that (both sides), but if you judge them by their actions instead of their words, they don't believe it either.

Really,  so you dont buy into the "fair share" and "they can afford it" rhetoric? 

[Eric]

Dude, you reject a lot of general premises.

It's a rejection kind of day.  I don't feel like working too much.  Let's get into it!

[DoubleDown]

Being in the Bay Area, I can see where OP is coming from.  In certain neighborhoods, yes, that combined income could 'feel' middle class.

Your post was thoughtful so I'm not directing my response at you. But it was a convenient post for me to address the dangerous, slippery slope fallacy of "high cost of living areas" that people fall so easily into.

Anyone living in a HCOL area knows exactly what they are involved in. No one should be crying anyone a river over their HCOL area expenses and housing, which incidentally come with large salaries for professionals. It's a choice that was made and could easily be avoided. But here's the deal: Even in HCOL areas, you do not have to incur high housing expenses. This forum has featured many people who have found ways to drastically cut their housing expenses. It's complete hogwash when someone offers up the usual excuses like, "We have to live in this gated community because it's the only safe neighborhood with the best schools and neighborhood pools." There is a lot of middle ground between "large SFH in a desirable neighborhood" and "van down by the river."

People buying houses in these areas (if that is even a wise choice is debatable) often have gigantic amounts of equity compared to people living in LCOL areas. OP is likely sitting on hundreds of thousands of dollars in equity.

Source: I live in one of the highest COL areas in the country (Northern Virginia), that also has the highest average HH income in the country, in a house that would be considered very average anywhere else in the country, but that you could sell and buy 5-10 identical models in a lower COL area. You won't hear me complaining about how expensive it is to live here, and I recognize we could have easily found lower-cost options if that was a priority for us (it isn't).

westchester may be more your speed.

lol, good times.

1)  Government spending is always more inefficient than private spending. 

That is an unsubstantiated and false claim, but no doubt we can find all kinds of examples of government waste (as well as in private industry).

[starguru]

1)  Government spending is always more inefficient than private spending.

From a utilitarian perspective, I disagree. The marginal utility of each dollar spent on the poor is so much higher than the marginal utility of each dollar spent on the rich, so government welfare programs for the poor contribute a great amount of utility, even with fraud and government bureaucracy. There's plenty of inefficiency in the government, but to declare the absolute that government spending is always more inefficient than private spending is ridiculous.

Even if I agree, which I don't, but even if I did, you are quibbling.  The government does nothing efficiently.  Oh, ok let's say its efficient 10% of the time.  That still inefficient 90% of the time.  To me, that means government spending is always inefficient, but if you have, to rework my statement to "Government spending is mostly inefficient".

Also, I disagree with your point about the utility of the government spending on the poor.  I am not disagreeing that the marginal utility of each dollar in the hands of the poor is greater.  I just dont think taxation is the way to get those dollars into the hands of the poor. 

[Allen]

We talk a lot about the Internet Retirement Police, but the MMM forums have their own middle class / upper class police.

[starguru]

Dude, you reject a lot of general premises.

It's a rejection kind of day.  I don't feel like working too much.  Let's get into it!

Yeah this is definitely affecting my production. :)

[Eric]

Dude, you reject a lot of general premises.

It's a rejection kind of day.  I don't feel like working too much.  Let's get into it!

Yeah this is definitely affecting my production. :)

We must both be government workers to be able to be so inefficient.  ;)

(I'm not, btw)

[Tetsuya Hondo]

Even if I agree, which I don't, but even if I did, you are quibbling.  The government does nothing efficiently.  Oh, ok let's say its efficient 10% of the time.  That still inefficient 90% of the time.  To me, that means government spending is always inefficient, but if you have, to rework my statement to "Government spending is mostly inefficient".

Compared to whom?

Perhaps the Fortune 500 companies that I worked for were the exception, but there were shit tons of "waste" and "inefficiency" all over the place.

Can you imagine if Google were a government agency? Oh, the headlines:

• Employees allowed to do non-productive work one day out of the week!
• Gourmet food served in the cafeterias!
• Executives flying first class!

The horror!

[iamlindoro]

We talk a lot about the Internet Retirement Police, but the MMM forums have their own middle class / upper class police.

I think the discussion has been derailed a bit into one of class, but really the question is "what is a high income?"  MMM himself refers to $250K as "a neverending nuclear explosion of cash."

http://www.mrmoneymustache.com/2014/03/19/make-it-big/

I am fortunate enough to be an earner in a household that makes about this, and I recognize how epic the amount of money we make together is.  We make enough to max out everyone's retirement account, buy a couple properties every year, save extra beyond that in taxable accounts, and travel over a month this year.  If I have a disagreement, it's just in calling what I, or the OP, make, "not a high income."  It is definitively a very, very high income.  Class may be subjective, but I submit that high versus low income can be evaluated against the average objectively.

[Malloy]

this post boggles my mind. I kind of hate throwing out numbers like this on the internet, but I grossed $180k in 2014 and I'm single with no kids and no mortgage. I'm pretty sure I know what it's like to pay "that kind of money" to the government, but the idea that there is anything "ohhh, poor me" about that scenario is seriously insane to me.

Its not a "poor me" thing, but more a "when is enough is enough" thing and a "is this really going to solve any problems" thing. 

So lets see, 180k, so your marginal rate is 28%, but i bet your effective rate is more like 20-23% especially if you are self employed, since you could effectively put 45k away in tax deferred retirement plans.  Plus the last 2 tax increases from Obama haven't affected you.  At all.  So your rates haven't gone up. 

Imagine someone saying you should pay 10% more.   Would you be happy writing an $18k check?  Do you feel your money would actually help anyone? 

I bet your perspective would change.  Even if it didn't, since raising taxes isnt going to fix any problems, there will be calls to raise them even more, so the next tax increase will change your perspective, or the one after that. 

Since there are so many people without savings out there, what if the plan was to tax savings, you know, to make things more fair?  Like 1% for anyone with more than 100k in the bank, back to the first dollar?  Would people care then?  Of course they would, because it would actually affect them.

Some perspective may help you too.  If you were born into any other country where you had the ability to make as much as you do here, you'd be paying a much higher tax rate.  If you were born into almost any other (modern) time period in this country, you'd be paying a much higher tax rate.  I understand if you think you're paying too much.  However, it's still a fact that taxes are at or close to an all time low for your income level, so you should understand if others feel like you're still getting a pretty good deal.

All of this hand-wringing about taxes being theft (or similar views, not in this threat, but about jack-booted government for or whatever) seems so anti-mustachian to me.  It's the law.  You can't change it.  Vote for the politicans that support your favorite tax schemes, and then stop bitching.  Honestly, every tax-obsessed person I know spends so much time and effort trying to minimize taxes that they'd be way ahead if they plowed that white-hot anger into something more productive.  I worked with this one guy who somehow got it in his head that switching his dollars several times a day between a regular 401(k) and a Roth 401(k) would somehow yield some kind of tax advantage.  He must have spent HOURS dicking around with his investments all day to yield some penny-level tax win over the government. Some people just like to have a villain in their lives, I guess, and the government makes a good target. Especially if the guy you don't like is in charge.  So, it becomes more important to get a psychological win over your villain of choice.  And that's where you get people threatening to quit or not work just to make sure the government doesn't get their hands on their dollars.  Sure, it would hurt them more, because they'd actually lose far more in that scenario.  But it still is a fairly common mindset.

[retired?]

To OP, yeah, I guess you sort of asked for it with the thread title.  But, having been there, I understand your "problem".  Mega back door is great if your employer offers after-tax contributions.  Mine did, and it was via Fidelity.  I am guessing it is an employer's choice rather than the provider.

My general (i.e. not very valuable) advice is to simply save aggressively so you can go to one income and/or move to a cheaper area.  You will be able to take advantage of these breaks at some point.  BUT, my advice is to earn it while you can (i.e. stay with 2 incomes unless they are lopsided, e.g. 200 and 33), then enjoy the benefits later.

Like someone said, at 250 or higher, say 300-400 or so, you really lose many benefits and get screwed (dick in ass gets longer......great one) as you have to pay the AMT.

Instead of viewing it from an "avoid taxes" point, determine what you want to do (go to one income, perhaps) and make choices based on that.

[Tetsuya Hondo]

All of this hand-wringing about taxes being theft (or similar views, not in this threat, but about jack-booted government for or whatever) seems so anti-mustachian to me.  It's the law.  You can't change it.  Vote for the politicans that support your favorite tax schemes, and then stop bitching.  Honestly, every tax-obsessed person I know spends so much time and effort trying to minimize taxes that they'd be way ahead if they plowed that white-hot anger into something more productive.  I worked with this one guy who somehow got it in his head that switching his dollars several times a day between a regular 401(k) and a Roth 401(k) would somehow yield some kind of tax advantage.  He must have spent HOURS dicking around with his investments all day to yield some penny-level tax win over the government. Some people just like to have a villain in their lives, I guess, and the government makes a good target. Especially if the guy you don't like is in charge.  So, it becomes more important to get a psychological win over your villain of choice.  And that's where you get people threatening to quit or not work just to make sure the government doesn't get their hands on their dollars.  Sure, it would hurt them more, because they'd actually lose far more in that scenario.  But it still is a fairly common mindset.

[Giro]

okay, ranting and raving aside.....Our household income is a little over $300K so I FEEL YA.  I don't even have mortage interest to deduct.  boo hoo...poor widdle me.

ANYWAY, since I just switched companies and now work for a smaller contracting company, I have worked out a deal where they put all of my November and December salary into the company 401K as an employer contribution.   viola...lower income. 

It's an idea. 

[DarinC]

I plan to do this next year. Last year 2014 I was on maternity leave for 5 months with no  earned income so I was able to do regular roth contribution for 2014. However I also have traditional IRA so would need to pay some tax when I convert into roth. So to avoid that I was planning on rolling over traditional IRA first into 401k so then I would have no pretax money in Traditional IRA and then do back door roth.

I think you can have multiple IRAs too, and IIRC as of 2014, you don't have to rollover your post-tax 401k contributions into an IRA and then convert to a roth IRA, you can roll them straight over.

If you have an ESPP you can also enroll in that since the company contribution is either free income, or a free write-off at your top marginal rate if you harvest your losses later, but that really only helps if you expect your marginal rate to be higher in the future, and it isn't much in the way of tax savings.

[2lazy2retire]

5)  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  If you taxed the top 1% at 100% above a million dollars, there would still be massive deficits.  The problem is run away entitlements.
.
[/quote]

Do you have real numbers on this - ie entitlements, everyone seems to band it about as the root of all evil. Anyone have a break down how much we spend on

Welfare - food stamps, free medicaid, unemployment etc,
Middle class welfare - mortgage tax deduction, subsidized employer provided healtcare, 529 tax breaks etc.
Corporate welfare - subsidies for large corps, income tax breaks for hedge fund managers etc.

[BayIslandSaver]

I'd be interested in knowing what city OP is in...
For the Bay Area the median income varies wildly city to city...if you're in Orinda (http://www.city-data.com/city/Orinda-California.html) where the median is:
Orinda:   $153,945
Piedmont: $200,000 +
CA:   $58,328

The above cities are considered top notch East Bay cities.  Move to a neighboring city, into a lower cost home, and feel like the king of the neighborhood! lol

[dragoncar]

okay, ranting and raving aside.....Our household income is a little over $300K so I FEEL YA.  I don't even have mortage interest to deduct.  boo hoo...poor widdle me.

ANYWAY, since I just switched companies and now work for a smaller contracting company, I have worked out a deal where they put all of my November and December salary into the company 401K as an employer contribution.   viola...lower income. 

It's an idea.

This SEEMS like it would run afoul of IRS.  Just because otherwise why don't more companies offer this?  Maybe I'll look into it... would be real nice.

[starguru]

5)  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  If you taxed the top 1% at 100% above a million dollars, there would still be massive deficits.  The problem is run away entitlements.
.

Do you have real numbers on this - ie entitlements, everyone seems to band it about as the root of all evil. Anyone have a break down how much we spend on

Welfare - food stamps, free medicaid, unemployment etc,
Middle class welfare - mortgage tax deduction, subsidized employer provided healtcare, 529 tax breaks etc.
Corporate welfare - subsidies for large corps, income tax breaks for hedge fund managers etc.

General google searching will yield much, but here are a few links I found.

http://www.usnews.com/opinion/articles/2012/12/19/the-shocking-truth-on-entitlements
http://www.wsj.com/articles/SB10000872396390444914904577619671931313542
http://en.wikipedia.org/wiki/United_States_federal_budget#Mandatory_spending_and_social_safety_nets

Edit, a few more
http://en.wikipedia.org/wiki/United_States_federal_budget#CBO_budget_projections
http://www.cnbc.com/id/101264757#.

Anecdotally, I have a cousin how works on the hill for a senator.  He says the only way we can sustain spending at current levels would be to "broaden the tax base", ie raise taxes on everyone.  According to him, everyone on the hills knows it too, but the rest is politics.

[gluskap]

Wow I'm still a little new to these forums so didn't think this post would get so much discussion.  Just to clarify it was only last year that we both got promotions/new jobs that bumped us each into the six figure salary.  So when getting all our stuff together to start doing our taxes I guess I was a little taken aback by how our income phases us out for a lot of credits.  So I guess my previous middle class mentality hasn't quite caught up to our higher salaries.  It would probably be more fair to say that we are upper middle class/lower upper class now.

I can see now how this post sounded a bit complainy pants.  But I think I did get some really great suggestions from it though.  I will definitely look into seeing if I can pay for next year's property taxes this year and then just take the standard deduction the next year.  Also, I guess there might be a possibility for me to do consulting in my field and be self employed but that might mean a paycut and more work so not sure if I want to go that route.  But definitely something to consider. 

I realize that it was our choice to live here and we probably could've gotten a cheaper house but again that was done before coming to MMM.  I have an opportunity in another 2 years for another promotion but it comes with a lot of stress.  Already feeling the stress now and really don't want to make any more money.  Just want to save as much as I can and FIRE earlier.  Oh and I'm happy to pay taxes because I do appreciate how lucky we have it living here.  My parents were immigrants and came to this country penniless so we were on welfare for a few months until they were able to get jobs.  I've also seen a lot of people cheating the system and a lot of wasteful government spending as well so I just don't want to pay anymore than I legally have to. 

I think my bigger problem is not having to pay more taxes but more how I feel like I have these golden handcuffs with this job and it's hard to walk away from such a high income even with all the stress.  Should I just suck it up and stay and FIRE earlier?  Or should I get a lower paying less stressful job and work longer?  What would you do?

[gimp]

You're not middle class...

I have to pay a bunch of taxes too. I don't cry about it. The more I pay, the higher above average I am. The more I pay, the more goes into health, education, infrastructure... all things we need for people to do well enough to buy the stuff my company makes which gets me paid.

[2lazy2retire]

5)  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  If you taxed the top 1% at 100% above a million dollars, there would still be massive deficits.  The problem is run away entitlements.
.

Do you have real numbers on this - ie entitlements, everyone seems to band it about as the root of all evil. Anyone have a break down how much we spend on

Welfare - food stamps, free medicaid, unemployment etc,
Middle class welfare - mortgage tax deduction, subsidized employer provided healtcare, 529 tax breaks etc.
Corporate welfare - subsidies for large corps, income tax breaks for hedge fund managers etc.

General google searching will yield much, but here are a few links I found.

http://www.usnews.com/opinion/articles/2012/12/19/the-shocking-truth-on-entitlements
http://www.wsj.com/articles/SB10000872396390444914904577619671931313542
http://en.wikipedia.org/wiki/United_States_federal_budget#Mandatory_spending_and_social_safety_nets

Edit, a few more
http://en.wikipedia.org/wiki/United_States_federal_budget#CBO_budget_projections
http://www.cnbc.com/id/101264757#.

Anecdotally, I have a cousin how works on the hill for a senator.  He says the only way we can sustain spending at current levels would be to "broaden the tax base", ie raise taxes on everyone.  According to him, everyone on the hills knows it too, but the rest is politics.

A quick look at the links suggest a selection to support your argument, anyone have a numbers for the cost of middle class/corporate welfare

[seattlecyclone]

5)  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  If you taxed the top 1% at 100% above a million dollars, there would still be massive deficits.  The problem is run away entitlements.

Do you have real numbers on this - ie entitlements, everyone seems to band it about as the root of all evil. Anyone have a break down how much we spend on

Welfare - food stamps, free medicaid, unemployment etc,
Middle class welfare - mortgage tax deduction, subsidized employer provided healtcare, 529 tax breaks etc.
Corporate welfare - subsidies for large corps, income tax breaks for hedge fund managers etc.

I don't have numbers on entitlements, but I can speak to the first part (that taxing high earners won't solve the budget deficit all on its own). President Obama has campaigned over and over again on a tax policy where only income over $250k should be taxed more. Let's take a look at how much difference that might make.

According to the Census Bureau, there were almost 2.5 million households with income over $250k in 2010. These households had a mean income of $398k, which exceeds $250k by $148k. This is the amount that might be affected by increased taxes on "high earners" as defined by President Obama. $148k * 2.5 million people = $370 billion. I don't really envision a scenario where an increase of more than 25% had any chance at passing, so let's say $92.5 billion is the absolute upper bound of the revenue that could be raised by increasing taxes on income over $250k. By contrast, the budget deficit in 2014 was $483 billion, and expected to rise slightly in 2015.

If you want to raise taxes on higher income out of some sense of fairness, that's one thing. It's simply wrong to imply that people making over $250k could fix the budget deficit all on their own. They could make a noticeable dent in it, but some tax increases and/or spending cuts that affect the middle class would be required to get us the rest of the way there.

[starguru]

5)  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  If you taxed the top 1% at 100% above a million dollars, there would still be massive deficits.  The problem is run away entitlements.
.

Do you have real numbers on this - ie entitlements, everyone seems to band it about as the root of all evil. Anyone have a break down how much we spend on

Welfare - food stamps, free medicaid, unemployment etc,
Middle class welfare - mortgage tax deduction, subsidized employer provided healtcare, 529 tax breaks etc.
Corporate welfare - subsidies for large corps, income tax breaks for hedge fund managers etc.

General google searching will yield much, but here are a few links I found.

http://www.usnews.com/opinion/articles/2012/12/19/the-shocking-truth-on-entitlements
http://www.wsj.com/articles/SB10000872396390444914904577619671931313542
http://en.wikipedia.org/wiki/United_States_federal_budget#Mandatory_spending_and_social_safety_nets

Edit, a few more
http://en.wikipedia.org/wiki/United_States_federal_budget#CBO_budget_projections
http://www.cnbc.com/id/101264757#.

Anecdotally, I have a cousin how works on the hill for a senator.  He says the only way we can sustain spending at current levels would be to "broaden the tax base", ie raise taxes on everyone.  According to him, everyone on the hills knows it too, but the rest is politics.

A quick look at the links suggest a selection to support your argument, anyone have a numbers for the cost of middle class/corporate welfare

I wasnt aware that usnews, the wall street journal, wikipedia, or the congressional budget office (from inside the wikipedia article) were considered bias.  Do your own research and show me some counter examples that show raising income or capital gains taxes on 1% of the population is enough to get the job done. 

Edit

doesn't talk about solving the problem but shows the projected growth of entitlement programs

http://www.taxpolicycenter.org/taxtopics/budget/longterm.cfm

I believe the TPC is considered liberal.  The links under the Facts section are informative.

[Jersey]

With all the talk about what is and what is not a high income in this country, I went on an exploration and found this tool:

http://politicalcalculations.blogspot.com/2013/09/what-is-your-us-income-percentile.html#.VMKocNLF_pp

It is up to date as of 2013 data from the US Census Bureau.

[bogart]

... we are just refinancing to a 15 year  ...

I'll admit I read through this thread mostly for the giggles (and groans) given the OP's stated income.  That said, the obvious solution, or at least an obvious improvement, not to your Q about taxex situation but to your concerns about your work situation would be NOT to refinance and to pay down the mortgage ahead of schedule, anyway -- assuming no penalty for doing so, which most don't.  Sure, you don't get the benefit of the lower interest rate for the shorter term, but ALL mortgages are at record lows at the moment, so take the 30-year rate, pay the 15-year payment amount, and be done well ahead of 30 years (and at much lower total interest by paying it off sooner) without losing the flexibility of the lower (required) payment if something in your life takes a turn for the worse.

Sounds from your later posts like you've already refi'ed, though, so that may not be an option.

[gluskap]

I'd be interested in knowing what city OP is in...
For the Bay Area the median income varies wildly city to city...if you're in Orinda (http://www.city-data.com/city/Orinda-California.html) where the median is:
Orinda:   $153,945
Piedmont: $200,000 +
CA:   $58,328

The above cities are considered top notch East Bay cities.  Move to a neighboring city, into a lower cost home, and feel like the king of the neighborhood! lol

We live in Temple City (in Los Angeles county).  Median income is $60,452 but median home or condo value is $511,248 compared to only $349,400 for the rest of California.  We are somewhat limited to location as I work in the valley and hubby works in the south bay so trying to find a house in the middle was hard.  As it is we both have to commute about an hour each way to work.  We were also looking for a house with a good school district.   

[Malloy]

5)  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  If you taxed the top 1% at 100% above a million dollars, there would still be massive deficits.  The problem is run away entitlements.

Do you have real numbers on this - ie entitlements, everyone seems to band it about as the root of all evil. Anyone have a break down how much we spend on

Welfare - food stamps, free medicaid, unemployment etc,
Middle class welfare - mortgage tax deduction, subsidized employer provided healtcare, 529 tax breaks etc.
Corporate welfare - subsidies for large corps, income tax breaks for hedge fund managers etc.

I don't have numbers on entitlements, but I can speak to the first part (that taxing high earners won't solve the budget deficit all on its own). President Obama has campaigned over and over again on a tax policy where only income over $250k should be taxed more. Let's take a look at how much difference that might make.

According to the Census Bureau, there were almost 2.5 million households with income over $250k in 2010. These households had a mean income of $398k, which exceeds $250k by $148k. This is the amount that might be affected by increased taxes on "high earners" as defined by President Obama. $148k * 2.5 million people = $370 billion. I don't really envision a scenario where an increase of more than 25% had any chance at passing, so let's say $92.5 billion is the absolute upper bound of the revenue that could be raised by increasing taxes on income over $250k. By contrast, the budget deficit in 2014 was $483 billion, and expected to rise slightly in 2015.

If you want to raise taxes on higher income out of some sense of fairness, that's one thing. It's simply wrong to imply that people making over $250k could fix the budget deficit all on their own. They could make a noticeable dent in it, but some tax increases and/or spending cuts that affect the middle class would be required to get us the rest of the way there.

1.  That's survey data, and it's not clear if that survey includes investment income (taxed under a separate code)
2. The mean is 398k, so, by definition, half of households are above it, right?  I don't think your number represents an absolute upper bound as you claim unless you know more about the top half of your distribution. You just know the size of the group, but you don't know their incomes. Because you already know your bottom parameter is 250k, you are assuming that the top half is distributed in an even curve about 398k so that the upper bound is 398k + 148k, which doesn't seem like a reliable assumption.

in any case, I see this argument peddled by the right quite a bit, and it's basically like-taxing rich people WON'T EVEN HELP, so don't bother.  However, tax policy proposals are not based on revenue estimates from the census, but IRS data.

[2lazy2retire]

5)  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  Raising taxes on the highest earners will not solve our budget problems.  If you taxed the top 1% at 100% above a million dollars, there would still be massive deficits.  The problem is run away entitlements.
.

Do you have real numbers on this - ie entitlements, everyone seems to band it about as the root of all evil. Anyone have a break down how much we spend on

Welfare - food stamps, free medicaid, unemployment etc,
Middle class welfare - mortgage tax deduction, subsidized employer provided healtcare, 529 tax breaks etc.
Corporate welfare - subsidies for large corps, income tax breaks for hedge fund managers etc.

General google searching will yield much, but here are a few links I found.

http://www.usnews.com/opinion/articles/2012/12/19/the-shocking-truth-on-entitlements
http://www.wsj.com/articles/SB10000872396390444914904577619671931313542
http://en.wikipedia.org/wiki/United_States_federal_budget#Mandatory_spending_and_social_safety_nets

Edit, a few more
http://en.wikipedia.org/wiki/United_States_federal_budget#CBO_budget_projections
http://www.cnbc.com/id/101264757#.

Anecdotally, I have a cousin how works on the hill for a senator.  He says the only way we can sustain spending at current levels would be to "broaden the tax base", ie raise taxes on everyone.  According to him, everyone on the hills knows it too, but the rest is politics.

A quick look at the links suggest a selection to support your argument, anyone have a numbers for the cost of middle class/corporate welfare

I wasnt aware that usnews, the wall street journal, wikipedia, or the congressional budget office (from inside the wikipedia article) were considered bias.  Do your own research and show me some counter examples that show raising income or capital gains taxes on 1% of the population is enough to get the job done. 

Edit

doesn't talk about solving the problem but shows the projected growth of entitlement programs

http://www.taxpolicycenter.org/taxtopics/budget/longterm.cfm

I believe the TPC is considered liberal.  The links under the Facts section are informative.

My argument is not about raising taxes, I was just jumping on the usual entitlements BS which tends to suggest that a bunch of lazy layabouts on food stamps is what causing this country to broke. No one ever questions all the kick backs to the middle and upper classes.

[lizzie]

It's always amazing to me how every single person in this country thinks that they are Middle Class. 

I think Bill Gates and Warren Buffett have both admitted to not being middle class.  But they might be the only ones.

$116,500 is not a high income for an individual person.

Yes it is.  It is not an unthinkably outrageous income, but it is indeed a high income.
The median HOUSEHOLD income is $51k.  So for ONE person to be making double that, it is indeed high.

"I have never yet known a man admit that he was either rich or asleep: perhaps the poor man and the wakeful man have some great moral advantage."
-Patrick O'Brian, Master and Commander

[seattlecyclone]

I don't have numbers on entitlements, but I can speak to the first part (that taxing high earners won't solve the budget deficit all on its own). President Obama has campaigned over and over again on a tax policy where only income over $250k should be taxed more. Let's take a look at how much difference that might make.

According to the Census Bureau, there were almost 2.5 million households with income over $250k in 2010. These households had a mean income of $398k, which exceeds $250k by $148k. This is the amount that might be affected by increased taxes on "high earners" as defined by President Obama. $148k * 2.5 million people = $370 billion. I don't really envision a scenario where an increase of more than 25% had any chance at passing, so let's say $92.5 billion is the absolute upper bound of the revenue that could be raised by increasing taxes on income over $250k. By contrast, the budget deficit in 2014 was $483 billion, and expected to rise slightly in 2015.

If you want to raise taxes on higher income out of some sense of fairness, that's one thing. It's simply wrong to imply that people making over $250k could fix the budget deficit all on their own. They could make a noticeable dent in it, but some tax increases and/or spending cuts that affect the middle class would be required to get us the rest of the way there.

1.  That's survey data, and it's not clear if that survey includes investment income (taxed under a separate code)

Sure, surveys can be wrong. I generally trust the Census Bureau to be in the right ballpark though.

This data comes from the Current Population Survey. As part of the question about household income, they say "This includes money from jobs, net income from business, farm or rent, pensions, dividends, interest, social security payments and any other money income received." Seems like that covers investment income.

2. The mean is 398k, so, by definition, half of households are above it, right?  I don't think your number represents an absolute upper bound as you claim unless you know more about the top half of your distribution. You just know the size of the group, but you don't know their incomes. Because you already know your bottom parameter is 250k, you are assuming that the top half is distributed in an even curve about 398k so that the upper bound is 398k + 148k, which doesn't seem like a reliable assumption.

I think you may be confusing the concepts of mean and median. If $398k was the median, that would mean half the group is above it. The skewed income distribution would then make the mean significantly higher than that. However the $398k number is the mean, which is defined as the total income of everyone in the group divided by the number of households in the group.

Given that the Census Bureau provided mean numbers, the total income is easy to calculate, as is the total income over $250k (since they helpfully separated out people earning over $250k into their own group in the data). If you assume the survey data is reasonably correct (as I do), the math holds up.

in any case, I see this argument peddled by the right quite a bit, and it's basically like-taxing rich people WON'T EVEN HELP, so don't bother.  However, tax policy proposals are not based on revenue estimates from the census, but IRS data.

I'm not saying it won't help. By all means, raise tax rates on high earners as part of the overall solution. Just realize that you can't take care of more than 20% of the budget deficit from taxing high earners alone. Even that much of an increase is unlikely to pass Congress even with a Democratic majority in both houses. Forget about it with Republicans in charge. The other 80-90% has to come from somewhere else.

I would love to see IRS data on this. I haven't found that they have nearly as rich of a publicly searchable data set as the Census Bureau does. However if you can point me to a table that shows how much income over $250k that the IRS thinks there is, I'd be happy to revise my argument to fit that set of data instead.

[dd564]

I worked a week of my life, and I was not able to retire.
I am middle class.

If I made enough in that one week to retire for the next 80 years of my life, I would not be middle class.

[Malloy]

2. The mean is 398k, so, by definition, half of households are above it, right?  I don't think your number represents an absolute upper bound as you claim unless you know more about the top half of your distribution. You just know the size of the group, but you don't know their incomes. Because you already know your bottom parameter is 250k, you are assuming that the top half is distributed in an even curve about 398k so that the upper bound is 398k + 148k, which doesn't seem like a reliable assumption.

I think you may be confusing the concepts of mean and median. If $398k was the median, that would mean half the group is above it. The skewed income distribution would then make the mean significantly higher than that. However the $398k number is the mean, which is defined as the total income of everyone in the group divided by the number of households in the group.

I stand corrected!  I was thinking median.  That number still seems off to me...and on the low end.  I don't disagree that tax burdens can be spread among separate income groups, but I really hate this current strain of thinking that demonizes people on the bottom end of the income spectrum as being takers who need to put some skin in the game and have their taxes go up so that higher earners can get yet another tax break.  It's so distasteful that people seem to revel in the idea that these people are lazy moochers. 

[Tetsuya Hondo]

I have considered just being a SAHM to lower our income but then we would be straining to make our mortgage since we live in a HCOL area.

I've never understood this mentality. I would never, ever, ever purposely cut my salary to avoid taxes. Yes, Uncle Sam takes a bigger bite as you go higher, up but you still get to keep the majority of it. It's cutting off your noise to spite your face...or whatever the appropriate idiom is. Why give up all of your extra income just because you'll lose a slightly higher percentage on that bit that exceeds the next tax bracket up?

On a side note, you're new to the boards and stuck your neck out there to get face punched, repeatedly. Welcome! It's actually a good group here. But this is still the Internet-World so innocent enough threads become an excuse to grind everyone's particular brand of axe. But congrats on the salary and being stuck with such a problem! It's nothing to be ashamed of! If anything, it's a great problem to have.

To be honest, I've had the same issue when I was a corporate suit and prior to self-employment (now, I have more tax levers to pull) and I too, always considered myself middle class. Perhaps I shouldn't. But, my blue collar roots and mentality die hard. I get that.

[dragoncar]

I have considered just being a SAHM to lower our income but then we would be straining to make our mortgage since we live in a HCOL area.

I've never understood this mentality. I would never, ever, ever purposely cut my salary to avoid taxes. Yes, Uncle Sam takes a bigger bite as you go higher, up but you still get to keep the majority of it. It's cutting off your noise to spite your face...or whatever the appropriate idiom is. Why give up all of your extra income just because you'll lose a slightly higher percentage on that bit that exceeds the next tax bracket up?

On a side note, you're new to the boards and stuck your neck out there to get face punched, repeatedly. Welcome! It's actually a good group here. But this is still the Internet-World so innocent enough threads become an excuse to grind everyone's particular brand of axe. But congrats on the salary and being stuck with such a problem! It's nothing to be ashamed of! If anything, it's a great problem to have.

To be honest, I've had the same issue when I was a corporate suit and prior to self-employment (now, I have more tax levers to pull) and I too, always considered myself middle class. Perhaps I shouldn't. But, my blue collar roots and mentality die hard. I get that.

I mean, if you value your marginal hour at $10, and you make $15/hr, you should cut your hours back (or scale them up) until you have a 33% marginal tax rate.  It makes sense logically.  It's not punitive*

With time vs. money, working an additional marginal hour is a double whammy: you have less time in the day so it's worth more to you, whereas the marginal dollars you'd earn working the extra hour are worth less and taxed more.  In a perfect world, you'd work a number of hours where those two forces are at equilibrium.  If tax rates go up, however, the equilibrium point would be lower, so you'd cut back hours.

*well, for some pouty Republicans maybe it's intended to be punitive

[Tetsuya Hondo]

I mean, if you value your marginal hour at $10, and you make $15/hr, you should cut your hours back (or scale them up) until you have a 33% marginal tax rate.  It makes sense logically.  It's not punitive*

With time vs. money, working an additional marginal hour is a double whammy: you have less time in the day so it's worth more to you, whereas the marginal dollars you'd earn working the extra hour are worth less and taxed more.  In a perfect world, you'd work a number of hours where those two forces are at equilibrium.  If tax rates go up, however, the equilibrium point would be lower, so you'd cut back hours.

Theoretically, I can almost see the logic in this if you are an hourly worker (although, I'm either not bright enough and/or had too much cheap tempranillo tonight to fully comprehend this), but I just don't see this working out in a practical sense.

Yet, even then, some of my projects are paid on an hourly basis, and I have never ever worked less because I'm worried about hitting some higher rate tax bracket and losing a slightly higher percentage of my income. I do however weigh the value of my free time versus getting paid extra. But, the percentage difference in taxes is not enough to be a serious consideration to me. It doesn't enter into my equation at all. Now, if the extra were taxed at 90% then yeah, it would make a difference. But going from 28 to 35% or whatever, just isn't than onerous, especially when you're only talking about the chunk of cash that's at the next threshold.

And if you're a salaried worker, with all things being equal, would you ever really take a lower paid job because you're taxed slightly higher? At the end of the day, you're still making a fair amount more money.

Am I missing something here?

[dragoncar]

I mean, if you value your marginal hour at $10, and you make $15/hr, you should cut your hours back (or scale them up) until you have a 33% marginal tax rate.  It makes sense logically.  It's not punitive*

With time vs. money, working an additional marginal hour is a double whammy: you have less time in the day so it's worth more to you, whereas the marginal dollars you'd earn working the extra hour are worth less and taxed more.  In a perfect world, you'd work a number of hours where those two forces are at equilibrium.  If tax rates go up, however, the equilibrium point would be lower, so you'd cut back hours.

Theoretically, I can almost see the logic in this if you are an hourly worker (although, I'm either not bright enough and/or had too much cheap tempranillo tonight to fully comprehend this), but I just don't see this working out in a practical sense.

Yet, even then, some of my projects are paid on an hourly basis, and I have never ever worked less because I'm worried about hitting some higher rate tax bracket and losing a slightly higher percentage of my income. I do however weigh the value of my free time versus getting paid extra. But, the percentage difference in taxes is not enough to be a serious consideration to me. It doesn't enter into my equation at all. Now, if the extra were taxed at 90% then yeah, it would make a difference. But going from 28 to 35% or whatever, just isn't than onerous, especially when you're only talking about the chunk of cash that's at the next threshold.

And if you're a salaried worker, with all things being equal, would you ever really take a lower paid job because you're taxed slightly higher? At the end of the day, you're still making a fair amount more money.

Am I missing something here?

Let me ask you: why don't you go out and get a part-time job to supplement your income right now?  You'd make more money, after all.

[Tetsuya Hondo]

Let me ask you: why don't you go out and get a part-time job to supplement your income right now?  You'd make more money, after all.

I won't because I only have so many hours in the day and even if I did, I'm lazy. But, that has nothing to do with taxes.

[dragoncar]

Let me ask you: why don't you go out and get a part-time job to supplement your income right now?  You'd make more money, after all.

I won't because I only have so many hours in the day and even if I did, I'm lazy. But, that has nothing to do with taxes.

Is there no Amount of money that would entice you to work, say, an extra 4-hour shift on Saturdays?

[Vilgan]

I'm a bit sad that people from Seattle have posted and not suggested the clear solution to OPs problem as opposed to discussing what is/isn't middle class.

Answer to OPs problems: Get similar jobs in Seattle for roughly the same salary (or very slightly less) and enjoy the following:

1) No State Income Tax
2) SIGNIFICANTLY cheaper housing. I bought a brand new amazing home near the lake and 15 minutes (transit, quicker if driving) from downtown for 400k.
3) Better hiking, views, trees, etc
4) A better (typically) work life balance since there is a pretty significant cultural difference between Seattle and the Bay area

Obviously this involves actually finding a job and moving, but it WOULD reduce your taxes and probably make you happier! :)

[DarinC]

Do you have real numbers on this - ie entitlements, everyone seems to band it about as the root of all evil. Anyone have a break down how much we spend on

Welfare - food stamps, free medicaid, unemployment etc,
Middle class welfare - mortgage tax deduction, subsidized employer provided healtcare, 529 tax breaks etc.
Corporate welfare - subsidies for large corps, income tax breaks for hedge fund managers etc.

Heres' my 2c on it from the POV of taxes.

Total US government spending in 2013 was $3.45 trillion and revenue was $2.77 trillion, leaving us with a $680 billion dollar deficit.

http://en.wikipedia.org/wiki/2013_United_States_federal_budget

Making up that shortfall through taxation alone is possible, but difficult. For instance in the revenue from corporate taxes in 2013 was $273 billion at a 35% rate. If we were to have the corporate tax rates of the late sixties of ~53%, that would increase revenue by ~$140 billion, which would have reduced the 2013 deficit to ~$540 billion.

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=203

http://en.wikipedia.org/wiki/Taxation_history_of_the_United_States#Corporate_tax

The top 10% of earners in the country pay ~$580 billion in income taxes with a top marginal rate of 39% or so, compared to a top marginal rate of ~92% on income above $200k after WWII. With the average household AGI for the top 5% at ~400k+, if we increased the top marginal rate to post-WWII levels (increase the rate and lower the income required to hit that rate), it would result in revenues on that top marginal rate of ~$1.30 trillion versus the current marginal rates of 33-40% and revenues of ~.3 trillion, which would wipe out the deficit and leave us with a ~$460 billion surplus.

http://taxfoundation.org/article/summary-latest-federal-income-tax-data

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Marginal_tax_rates_for_2013

In addition, there are more than a few people myself included, who think we spend too much in defense. Cutting that down to a more conservative ~$300 billion/year would increase a surplus to ~$760 billion/year, and we would still outspend the rest of the world in defense, but by a smaller amount.

https://blogs.lclark.edu/hart-landsberg/category/military-spending/

This surplus would pay off the national debt in ~25 years give or take, just via increases in taxes on the top 10%, corporations, and cutting defense spending in half. I would even got a bit farther a suggest that everyone pay the same amount in taxes we were paying post-WWII and that we should also audit and reduce spending on other government programs where it's excessive and doesn't have much bang for the buck. All told, I imagine this would allow us to eliminate the national debt in ~10-15 years.