One of our most active METARs, @intercst , boasts about doing the same thing. A self-declared millionaire, for years he boasted about investing in non-dividend-paying stocks so his income was so low that he qualified for the ACA subsidy. This was legal and he is probably as smart as he thinks he is.
When a system is set up to be gamed don’t be surprised if some people game it.
But, unlike your DH’s friends who are taking side jobs to get undeclared income fraudulently, @intercst appears to be honest. If those people were caught their benefit fraud would be the least of their problems since the IRS would nail them for tax evasion.
Wendy
I wouldn’t argue against that loophole being closed, but yes, Intercst at least seemed to do it legally. Another legal but questionable behavior is using handicap parking passes that are not yours or when you no longer need it. Someone we were letting live in our downstairs apartment rent free for 10 months was invited to leave for that. Not a trust building behavior with me.
IMO there is the letter of the law and the intent of the law. Intercst met the letter of the law, but not the intent. Legal is not always moral.
ACA subsidies are chump change. The big benefit of the Reagan Revolution in the 1980’s was jacking taxes on working folks (i.e. the Reagan Democrats who loved the racist dog whistling, and that distracted them from the arithmetic) while giving big tax breaks to those benefiting from investment income and inherited wealth with the stepped-up cost basis.
By age 30, I realized it was much easier to become wealthy through the stock market rather than working a lot of uncompensated overtime in my engineering career in the hope of big raises and promotions. Your smartest and most resourceful employees are going to respond to incentives. And when I did the arithmetic on wage & salary income vs. the Leisure Class taxation regime that benefits the wealthy, it wasn’t even close.
For 2025, a married couple can take $126,000/yr in qualified dividends & capital gains in the 0% bracket (assuming that’s their only income – wage & salary income is toxic and would result in some investment income being taxed.)
Meanwhile, a neighbor couple with $126,000/yr in wage & salary income would pay about $18,000 in Federal income tax and FICA. You save, invest and compound that difference in taxation over 30 years and it’s a fortune.
Of course, few people understood this 30+ years ago when I early retired at age 38 in 1994. Today there are 2.3 million people on the Reddit/financial-independence forum honing and refining these techniques.
And there’s good news for those that worry that wealthy grifters like intercst get too many subsidies meant for the poor.
My 2025 plan was to get up to $17,000 in 100% refundable energy efficiency credits for a new HVAC system, heat pump water heater, bigger electrical distribution power panel, etc, plus a $4,000 tax credit on a used EV. Unfortunately, I’ll have to limit my 2025 income to about $66,000/yr to qualify for the $17,000 in energy efficiency credits. And since the bulk of my income is qualified dividends and capital gains in the 0% bracket, I’ll only be paying enough Federal income tax to get a tiny piece of the $4,000 used EV tax credit. Bummer. {{ LOL }}
Yep. Like I said, the racist dog whistling distracted working people from the arithmetic.
It’s not like I’m working with tax lawyers in the Caymen Islands and multiple LLCs. I’m just reading the IRS Tax Tables and using Turbo Tax to file my return. It’s nothing exotic – just arithmetic.
Why is this unacceptable, but nobody worries about enforcing a “means test” on the trillions of dollars in tax cuts for billionaires? Like I said, the Reagan deceit is distracting people from the arithmetic.
Whenever I worry about the morality of taking a tax benefit, I ask myself “What would Mitt Romney do?”
As Chairmen of Bain Capital, Mitt Romney got tens of millions of dollars in tax breaks during his career as a corporate asset stripper and jobs outsourcer to foreign lands, while cheating workers in middle American factories out of their jobs, pensions, and health insurance.
Yet Mitt Romney is regarded as one of the most patriotic and Christian men in the nation.
Your DH’s friends should feel equally patriotic about the tax benefits they’re getting. Tax breaks shouldn’t be just for the super wealthy. Middle-class millionaires should feel good about getting them, too.
As someone who just turned age 69, I’d feel safer if bright young women in need of cash turn to the sex trade rather than selling high-fee annuities to the elderly.
Interesting and it says a lot about you. Mitt Romney is not my moral compass.
I have taken my share of tax breaks, including unemployment for a layoff I volunteered for, (was allowed by the state.) And yes, I have been quite aware of the arithmetic involved in calculating whether or not to continue working after having kids. I did not. Spousal benefits for SS made it particularly impractical, assuming of course that we are not means tested out of SS by the time DH turns 70. Happily that is one insurance we would survive not collecting, but boy I sure would like to get some of my non-optional premiums back even so. But one thing the Trumpist party seems to have forgotten is that there are the Nation’s laws, and then there are God’s laws. Depending on your beliefs, the two may not be the same, and given the division of Church and State requirements, the police should not be enforcing the laws that are not made by the gov’t. Not religious? There’s always Karma.
Youngest graduated college during Covid and like his classmates, had a tough time finding a professional job. Unemployment checks became available to them, even without history of paying unemployment insurance. Many of his friends took that time off, while he went out and found manual labor that was related to his degree. We were crazy proud of him for doing so, and from a Karma POV he was able to use anecdotes from his 15 months on that job to demonstrate what a valuable employee he was. His first phone interview, (with over 50 resumes sent out,) was over 2 hours long and they hired him on the spot. Sure, he could have goofed off and collected unemployment, but instead identified issues with how chemicals were being applied in the field, improvised a fix for the sprayer that kept the nasty chemicals from dripping down the back of the guys spraying it, developed a training program to make sure everyone knew how to use the tools, and then presented the problem with a solution to his boss. By the time he left for his new career move, they were talking about promoting him to his boss’ job that his degree should have gotten him in the first place. Make lemonade from lemons, or say stick it to the man…it’s a choice.
I am seeing that everyone has different principles. You see I took a layoff also and my state allowed me to go on unemployment but my wife and I decided it would be morally wrong to take the unemployment.
Good for you. Seriously. It was part of what convinced me to volunteer. It was explained to me that they had cleared it with the state and that I was saving someone else’s job who couldn’t afford to quit. Company was so grateful that it let me work from home for the 3 months between end of maternity leave and layoffs starting, so we didn’t have to get a nanny. It was the 5th layoff in 4 years. Company no longer exists.
That’s great. I hope he continues to be rewarded for his industry.
Unfortunately, the hardest workers often get cheated and robbed in Corporate America. That’s why I found it far more profitable to make an early exit, and bask in the glory of the Leisure Class taxation regime implemented and promoted by the sainted Ronald Reagan.
Yes. It’s morally wrong for you to go on the unemployment compensation you’re entitled to, yet the senior Senator from Florida ran a for-profit hospital company engaged in the then World Record $1.7 Billion Medicare fraud and remains a Big Time Christian.
Watch what your leaders are doing, rather than listening to the Gospel they’re preaching.
When I left Exxon in 1986 after the oil industry collapsed, I got six months of severance pay, plus Exxon said they wouldn’t contest an unemployment claim. The maximum amount you could get at the time was $203/week, which of course was a small fraction of my salary. I made sure I got my full benefit before decamping to California for a job in the Defense industry.
I proudly collected that $203/week for the full six months allowed, just as the Texas oil barons collected their full “depletion allowance” whether they needed it, or not. Best six months of my life up until that point and made me realize that it wasn’t necessary for me to submit to an employer’s supervision to “give my life purpose”.
