3 ms·

Can you expand on that? How do you get out of paying taxes?

allenu 7y ago
I think the 40% number is the point of contention. The highest tax bracket for 2019 is 37%, and that's a marginal rate, so no one is going to be paying 37% of ALL of their income. More likely it'll be in the range of 20-25% of all income.
- blackflame7000 7y ago
  You forgot about state tax in addition to federal taxes.
  - ska 7y ago
    right, but federal, state, and FICA is still less than 40%
    - blackflame7000 7y ago
      Not really. That's about what I paid last year.
      - ska 7y ago
        It's about 38% last year on that gross, as I noted elsewhere (including FICA and state). But assuming no 401(k) or match isn't realistic either so it's actually lower. I'm not really sure why you keep pushing back on all of this. It's just how the math works. The short version is, if you make $300k year if you are careful with the money you can have 1 million in savings in (conservatively) 6-8 years just by doing the obvious things, assuming reasonably similar market conditions.
      - Domenic_S 7y ago
        I paid 20% federal (effective) and something like 6% state (effective).
walshemj 7y ago
Good tax planning make best use of 401k and other tax advantaged plans there are these Roth planes for example. A FANG developer in London has even more opportunities Max out your pension (Tax relief at 40%) plus presumably an employer match around 5-8% Put £20k a year into a Stocks and Shares ISA - which puts that beyond tax for income and CGT (apart from stamp duty on share purchases) Put £30k into premium bonds and than start thinking about VCT's and EIS This is ignoring any shares scheme you are in
Domenic_S 7y ago
On average, the top quintile of earners pay 22.9% effective federal rate [1]. Take a look at your effective rates for 2019, I bet you pay less as a percent than you think. [1] https://www.pgpf.org/sites/default/files/All-income-groups-pay-taxes-but-overall-the-US-tax-system-is-progressive.jpg https://www.pgpf.org/sites/default/files/All-income-groups-p...

I think the 40% number is the point of contention. The highest tax bracket for 2019 is 37%, and that's a marginal rate, so no one is going to be paying 37% of ALL of their income. More likely it'll be in the range of 20-25% of all income.

blackflame7000 7y ago
You forgot about state tax in addition to federal taxes.
- ska 7y ago
  right, but federal, state, and FICA is still less than 40%
  - blackflame7000 7y ago
    Not really. That's about what I paid last year.
    - ska 7y ago
      It's about 38% last year on that gross, as I noted elsewhere (including FICA and state). But assuming no 401(k) or match isn't realistic either so it's actually lower. I'm not really sure why you keep pushing back on all of this. It's just how the math works. The short version is, if you make $300k year if you are careful with the money you can have 1 million in savings in (conservatively) 6-8 years just by doing the obvious things, assuming reasonably similar market conditions.
    - Domenic_S 7y ago
      I paid 20% federal (effective) and something like 6% state (effective).

walshemj 7y ago

Good tax planning make best use of 401k and other tax advantaged plans there are these Roth planes for example. A FANG developer in London has even more opportunities Max out your pension (Tax relief at 40%) plus presumably an employer match around 5-8% Put £20k a year into a Stocks and Shares ISA - which puts that beyond tax for income and CGT (apart from stamp duty on share purchases) Put £30k into premium bonds and than start thinking about VCT's and EIS This is ignoring any shares scheme you are in

Domenic_S 7y ago

On average, the top quintile of earners pay 22.9% effective federal rate [1]. Take a look at your effective rates for 2019, I bet you pay less as a percent than you think. [1] https://www.pgpf.org/sites/default/files/All-income-groups-pay-taxes-but-overall-the-US-tax-system-is-progressive.jpg https://www.pgpf.org/sites/default/files/All-income-groups-p...