Had an interesting conversation with my husband about the tax plan as part of the tax code's treatment of income from investment over income from labor.
On balance, we'll probably end up paying more in taxes when these changes are fully phased in--high SALT state and all that. But, it seems clear that companies are going to be absolutely flush with cash, and most of them are planning to use that money to either increase dividends or jack up their share prices through stock buybacks. Both of which will probably boost our portfolio considerably and, depending on timing and when the next inevitable recession finally comes, may even shave a few years off our FIRE date.
So, as investors, we're going to be rewarded by this. And, as a result, we're probably going to be removing ourselves from the labor market sooner rather than later.
Putting aside the question of "what if everyone became frugal" and all the valuable work many of us will be doing for our communities during FIRE, if the stated goal of the tax plan is to spur economic growth and vibrancy, incentivizing people to leave the labor force seems contrary to that. Both of us will probably retire AT LEAST 15 years before "standard" retirement age, meaning we're nixing a combined 30 years of economic output. This will be happening right about when an aging population will need ever greater support from the working population.
In reality, I suspect the number of people who can realistically FIRE is so small that it didn't even rise to the level of an afterthought in this process. But it begs the question of whether investment is too heavily incentivized and labor is too heavily disincentivized. Essentially, these policies are contributing to the creation of a permanent class of idle rich--and we're just riding along on the tiniest corner of their coattails.
