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Do you pay your fair share?

Imagine the following situation. You and your neighbor work hard. You both make let’s say $50,000 a year salary. You both are married, have a new-born child, nice decent house and a car. You happen to be colleagues from the same company which you started working for in about same time. You both take part at company’s 401k plan, you are both young and have a great and bright future in front of you.

A decent car

There is however a small, but significant difference between you two. Your wife and you save all the available income and besides your 401k invest it into an individual ROTH IRA or a taxable account. You take no vacation except twice or three times a year you take your family to another town and stay over the weekend or you have a stay-cation at home.

Your goal is to work hard enough to make money, save as much as possible, invest and learn to invest into dividend growth companies, create another stream of income, and retire early.

Working hard

Every day you work 9-5 and in the evening you are blogging or doing another activity hoping that one day it will be making you money.

Your friend next door doesn’t share your enthusiasm in investing and blogging or whatever your hobby is. The family next door travels every year to Europe skiing in Alps, or visiting exotic destinations in New Zealand, Caribbean islands, Australia, Japan or cruise around the North Pole. They share their excitement with you and photographs from the trips. They organize parties every other Saturday for which you are usually invited. Time to time you discuss politics and investments. You always try to gently push your friend into investing so you are enthusiastically painting him a great future of residual income without moving a finger. It however almost always ends with your friends statement, that it doesn’t make sense investing in today’s market because it is gambling and you can lose money.

Let’s take a time machine and

FAST FORWARD 10 YEARS

Ten years later you still live in the same house, drive the same car and still haven’t been in any major vacation. You and your wife are thinking and double guessing your strategy of super frugal living and having no fun at all. Your kids are close to their teenage age and haven’t been anywhere. So you decided to take a larger vacation and take the kids to Disneyland and spend a week in there.

Disney Land

You spent a real money on the vacation, but you are OK with it, After reviewing your retirement account you see that you saved and multiplied your saving to little over 250k. You were lucky, since one of your investment turned up to be a stock which performed so well that it almost tripled in value within ten-year period and its dividend yield on cost is exceeding 16%. You are happy with the result, contributing more cash and reinvesting all proceedings. You even learned how to invest in options and now you expect even better return in the next period. You still have the same job, but you were promoted several times and your salary raised almost every year. Your 401k has roughly another 48k saved and vested.

But more important is that your dividend income exceeded 19k a year and you know that in next decade you would be able to end the rat race.

 

Your friend’s family no longer lives next door. They bought a 10 room house on the other side of the town, they were buying a new car every three to four years and spending their vacations around the world.

Big house and a carYou are still friends, you still work together and they still invite you for the parties although the parties aren’t that ostentatious as they were before. Your friend is now more willing to listen to you when it comes to investing. He even told you that he already opened a new brokerage account and deposited 10,000 dollars in it. He bought some mutual funds, some hot tips he heard on TV, and subscribed to a few news letters. He lost some money on some investments, but it was because of the market manipulation and because the Wall Street mafia wanted to rip him off of his hard-earned cash. But he had no worries, because he just subscribed to a new option trading class and he is well positioned to beat the market in a few months if not even days.

Let’s use our time machine and

FAST FORWARD ANOTHER 10 YEARS

You worked really hard and the company promoted you and made you a director of a detached office in another state and you were responsible for the mid-west region. Your salary tripled big and your bonuses every year had five figures. You had to move, but the company offered you to cover the moving costs. You had your policy to save most if not all your salary increases and your taxable and ROTH accounts reached almost 2 million dollars in assets combined. Your dividend yield on cost averaged to 26% and your dividend income with your 401k, your blogging income, and social security reached 300k. At your 40s you and your wife decided to retire.

BankruptcyYour friend filled for bankruptcy during the housing bubble and his great house was foreclosed. He changed the job a few years ago in hunting for better deal and he tapped into his 401k savings during rollover and now failed to pay the loan so was hit with a penalty. His new 401k has 63k saved, his investment account is still teetering around 10k balance with a huge overall loss of almost 300 thousand dollars generated when trading stocks and options without proper knowledge. He knows he would have to work another 20 – 30 years to make up his loss and rebuild his retirement account.

Congratulation! Now give us your fair share!

Now, after 20 years of super frugal living, hard saving, learning, struggling with blogging, having no vacations and taking risk in the stock market your residual income exceeded 250,000 a year and you are considered RICH!

White House doesn’t care about all of that. It is not fair for you to pay less taxes than your poor neighbor who ended up ruined and paying more than you! It is not fair that Warren Buffet’s secretary pays in taxes more than him and more than YOU. You have to be taxed more than you are today. Your dividend income cannot be taxed at 15% only! It wouldn’t be fair!

YOU MUST PAY MORE!

Really?

Stephen Ohlemacher with Associated Press posted a study (if I can call it that way) showing that rich actually already pay a lot more than the rest of us. Obama and the leftists in Congress “say that wealthy must pay their fair share if the federal government is ever going to fix its finances and cut the budget deficit to a manageable level.” Rich taxesHe doesn’t care what effort it takes to people like you, who did whatever it took to end up rich, small business owners who take the risk everyday to manage their businesses give jobs and provide for their families.

Rich already pay their fair share! Tax bills for rich families approach 30-year high! So we have heard another lie from Obama and his illiterate voters are applauding him. What would happen if we repel our rich citizens? They will move their money and business elsewhere. Will increase of already high taxes increase tax revenue? No, it won’t. If you want example, just take a look to Europe. Europeans are already ahead with this social experiment and they already have their results. Just learn from them.

France? When the new socialist president increased tax for wealthy at 75% they ran away from the country. Gerard Depardieu left for Russia, Alan Delon went to Belgium to name just a few. Swedish companies moved their headquarters into Holland (this was happening already in 90s). And Britain? After the tax increase the tax revenue dropped by 50%!

And what about you? You worked so hard to meet your American dream. Don’t you think you already contributed through your life your fair share?





5 responses to “Do you pay your fair share?”

  1. […] Do You Pay Your Fair Share by Hello Suckers […]

  2. Martin says:

    Marvin, thanks for kind words. You are exactly right. And apparently it looks like it is a norm these days. Some crazy idiot starts shooting in school and all law abiding citizens will be punished, you work hard and therefore you will be punished. What happened to the American Dream and a saying that America is a country of unlimited opportunities?

  3. Martin says:

    MFIJ, you are right and you nailed it. You work hard and at the end when you happen to be successful you are taxed more. The justice of the left is, that all hard work and success must be severely punished.

    I am not rich, but I hope that one day I will be able to get there, what is fair here that now I pay low taxes and when I become rich I suddenly have to pay 41% instead of 15%? Where is that fairness? I can sort of understand it if you inherit your wealth without work. So then pay inheritance tax, but if you had to work hard to get rich, why should I pay more then? I don’t get it and it makes me mad!

  4. Love this article. It’s such a true story and for the life of me I can’t understand it. The people who are productive and savers are the individuals getting punished!

  5. So let’s see…

    I spent the whole of my 20’s working my tail off getting all kinds of advanced education and training which would then allow me to get the great job that I have now. My peers spent all their money on alcohol, iCrap, new cars, and expensive houses.

    I didn’t get to settle down or establish roots anywhere because I had to go where the education/training/jobs were. My peers got to start families, settle down, or just keep mooching off their parents.

    Now I work a demanding full time job. I save over 50% of my income. I spend my free time learning about investments and writing a blog. My peers do none of the above. They work an 8 hour a day job where doing more than the minimum is an option, not an expectation. And they keep spending money on iCrap, cars, etc.

    So yes, I paid my fair share. Whether in time, life milestones, living standards as a trainee, or whatever other metric you want to use.

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