Just noticed that Vanguard left about $8,500 of dividend income off the year end totals reported on the website. This was likely the result of that $900,000 ACATs theft I had in September. They gave me all new account numbers to prevent future fraud, but they left out combining one of the old accounts when computing the year end totals.
The last Roth conversion I did in December left me about $2,000 short of my IRMAA target income for 2026. Now I’m about $6,000 over and in the next IRMAA bracket.
Fidelity shafted me this year end by hopelessly screwing up and so delaying and so failing to execute a long planned set of tax oriented sales and transfers this last December. Their internal controls seem to have made them stutteringly slow, clogged in their own digital paperwork.
I was already furious with Schwab’s incompetence (beginning with their hideously unreliable time gobbling “my voice is my password” telephone port) after having gone there from degenerating Vanguard for my active investment accounts.
There’s the macro idea, you might laugh at how genius it is, that by reducing taxes the government can raise more money, paradoxically. It’s almost like multiverse, but the math is a little more next level than that.
So think of it this way, your tax avoidance is one small part of the elaborate calculations to make government more solvent. Great work, you’re doing your part!
Yes, I’m very familiar with that. Arthur Laffer was a prominent economic adviser to Ronald Reagan early in his first Presidential term. Laffer was the creator/promoter of the “Laffer Curve” – which predicted large increases in tax revenue with big tax cuts, though he now blames it on John Maynard Keynes. By that logic, a 0% tax rate should make every American as rich as Croesus. It was quickly implemented despite the reservations of those who understood arithmetic.
When deficits exploded and tax revenue failed to appear, Laffer became the buttt {sic, bot required spelling} of jokes and the Laffer Curve was popularly known as the Laugher Curve. His reputation never recovered. It gave “trickle down” a bad name.
Most credentialed economists will point out that it’s been quite a while since the US income tax rate was set high enough to be at its revenue generating maximum. “Innovations” like my 0% tax rate on qualified dividends and capital gains, and the stepped up cost basis on inherited wealth aren’t generating any tax revenue at all.
Today these theories are promoted by “thinkers” like Steven Moore.
The Laffer curve is real; what is unknown is the shape. The idea is that government revenues vary with the tax rate. The two ends are known. Obviously, if the tax rate is zero then revenues are zero. If the tax rate is 100% then revenues are zero (or close to it) as very, very few people would want to work if all of their pay/income were taxed away.
So the question is, what is the shape of the curve in-between? Do government revenues peak early at low rates?
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Do government revenues peak at higher rates?
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Do government revenues show a plateau over a broad range?
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Is the goal to maximize government revenue or something else?
Since we are in the mood for theorizing and proposing various curves, for the US, if all marginal tax rates on ordinary income are increased from current rates by 1%, in a hypothetical thought experiment with all else equal, would you estimate/guess that the resulting effect is that total tax revenue
In recent decades, federal revenues as a percent of GDP have fluctuated from 20.0% in 2000 to a low of 14.5% in 2009 and 2010.
A change of nearly 40%, which I don’t think can reasonably characterized as remarkably flat. If your personal income fell or rose by that much I’m sure you would think it was a dramatic change.
Yep. And there are large categories of income (e.g., qualified dividends & capital gains, stepped up cost basis on large estates, etc.) where the tax rate is far below the revenue generating maximum, or even 0%. {{ LOL }}
Just depends which crooked congressman you’re in a position to buy off.
And those are exceptional years. IIRC, 2000 was the only year since WW2 that the percentage got above the teens. That year saw massive capital gains tax from the dot com boom, followed by a crash. And the GFR needs no reminding.