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The biggest tax advantages for investing go to the rich, who can arrange their businesses and finances to max out retirement accounts, and very highly paid prof

The biggest tax advantages for investing go to the rich, who can arrange their businesses and finances to max out retirement accounts, and very highly paid professional with fat 401k matches. No matter how someone with a normal salary and a 2% match tries they cannot get anywhere near maxing out a 401k, due to how they’re structured (over 50% of the max can only come from an employer, and the employee can’t make that up on their own). They benefit the already-well-off much more than the middle class or poor. So there’s discouragement to savings built into our tax law (or stronger-than-appropriate encouragement available only to the already-doing-quite-well, if you prefer)

freediver 6y ago
"Rich" typically do not care about their retirement accounts and do not have an employer. They typically benefit from owning a business, having a stream of passive investments and compounding growth. But this may depend on your definition of rich.
- karatestomp 6y ago
  It’s my understanding that one can arrange for oneself (and family members) to be employed by one’s businesses such that 401ks are maxed out. This can amount to a huge de jure employment benefit but a de facto slow-motion tax-advantaged inheritance over, say, 20 or 30 years. Just live off trust assets and the rest of your wages (or whatever) until you can draw on retirement. Though yes it’s probably too small-potatoes for the rich rich to bother with. Mere tens-of-millions business owners are more the audience for that maneuver. Like everything else it seems one is likely to be smacked down for attempting to use it while not-rich (need enough legitimate business activity to make the wages to relatives plausible)
creddit 6y ago
> So there’s discouragement to savings built into our tax law (or stronger-than-appropriate encouragement available only to the already-doing-quite-well, if you prefer) Only the latter "version" of this is possibly true. Nothing you said shows a discouragement to savings. At best you showed that the wealthier are more encouraged to save.

freediver 6y ago

"Rich" typically do not care about their retirement accounts and do not have an employer. They typically benefit from owning a business, having a stream of passive investments and compounding growth. But this may depend on your definition of rich.

karatestomp 6y ago
It’s my understanding that one can arrange for oneself (and family members) to be employed by one’s businesses such that 401ks are maxed out. This can amount to a huge de jure employment benefit but a de facto slow-motion tax-advantaged inheritance over, say, 20 or 30 years. Just live off trust assets and the rest of your wages (or whatever) until you can draw on retirement. Though yes it’s probably too small-potatoes for the rich rich to bother with. Mere tens-of-millions business owners are more the audience for that maneuver. Like everything else it seems one is likely to be smacked down for attempting to use it while not-rich (need enough legitimate business activity to make the wages to relatives plausible)

creddit 6y ago

> So there’s discouragement to savings built into our tax law (or stronger-than-appropriate encouragement available only to the already-doing-quite-well, if you prefer) Only the latter "version" of this is possibly true. Nothing you said shows a discouragement to savings. At best you showed that the wealthier are more encouraged to save.