Not sure if you're living in the US, but I do and I have the exact opposite viewpoint. The amount of waste, corruption and poor planning by the gov't makes me feel like I'm throwing money away. I'd rather give it a charity since then I'd know a majority of it had an impact.
I think if the gov't was a bit more efficient and could be shown to be good stewards of money I'd probably hate paying taxes a lot less.
I live in one of the most corrupted countries in the world. Yet our newborn immunisation rate is nearly 100%, with free healthcare and education for the people in poorer rural area and ethnics minorities. And my tax money contributed to that.
I guess it's fine to hate your government, but a better solution is to change it than avoid paying tax. Because if people pay less tax then then the poor and vulnerable will be affected first, not the corrupted interest group.
Recently visited. It's a wonderful country. I loved the people, I love their pride and attitude. It's clear that you got some problems here and there (and maybe the family concept is a bit too strong). All in all, for me it's been just a wow after another. I met very few Americans, and each one of them was completely flabbergasted by how far the country and the people are from what they've been taught.
Coconut_crab, holy shit... I recognized your nickname from the VnOSS forum 10 years ago, so before I saw your answer, I already knew it. It's amazing you're still around. Hope you're still doing well.
Lovely country (excepting the smog in HCM) and lovely people. Until recently I had a company whose customers were primarily digital marketers in Vietnam. My anecdotal observation is that tax compliance is generally poor and enforcement is applied unevenly.
While whinging about taxes is a national pastime here in the US, we have one of the highest tax compliance rates in the world. These might be related. And it's not true that you can make taxes go away with accounting magic, although there seems to be a growing sentiment that "the other guy is doing it". Example: Bourdain's comment about avoiding taxes by living abroad is nonsense.
Those "transparency indexes" tend to reflect the biases (cultural and political) and the interests of the major contributors to the organizations that produce them (including organizations like OECD).
And unlike measurable data, where you can double check, here you have to agree not just on the methodology, but on the validity of various sources, self-reporting (which is often used as a proxy), etc.
I believe there are no examples of charity ever being able to provide the basic needs of all but a small percent of the poor of a nation. It was not charities that provided clean water. It was not charities that largely ended hunger or gave healthcare to the poor. It was not charities that educated the masses. Government is necessary. It can be done badly but it doesn't have to be.
You might be right but I'm not sure what you prevented is any kind of proof that charity couldn't provide those needs. It's just that in most cases, governments effectively have a monopoly on providing these kinds of services, making charity either redundant, or legally unable to provide said services.
Universal healthcare and other welfare reforms in most of the world came as a direct response to the total failure of charitable systems.
You are right: It's not proof that it can't work. However, despite extensive attempts, we also have no proof that it works, and plenty of proof that government welfare systems work far better than the charitable solutions that preceded them.
One big advantage that charities have and that helps them be much more efficient is that they can pick and choose who they help. If a group or problem is too hard or too expensive or not 'sexy' enough to deal with efficiently they can just ignore them. Governments can't do that.
Governments do that all the time. Look at the shitty schools we in USA force poor black kids to attend. It's easy to be confused by all the demonization and expectation-lowering we get from the media, if one pays attention to that shit. The end result is the same: if we changed public education at all, we might possibly inconvenience some suburbanites, therefore it's most efficient to just screw minorities and the poor as we have for decades.
How is that an "advantage"? It's basically leaving those behind that would need help the most, while it might be an advantage from an "efficiency point of view", it's not really an advantage in the bigger context of how to have a healthy and able population.
That's exactly what I meant. It's a lot easier to be a charity because you can ignore all the hard problems. That's why they look so much better than governments when you look at things like efficiency metrics.
In the time before governments provided these services, or in countries where the government is too broken to provide them, charity makes a good effort but fails to provide basic complete coverage.
"Could" is a weak argument. People could all get along and love each other, but they absolutely never will. In that sense, the "could" is really an illusion formed from an imperfect understanding of human nature as the function of a large group, over time.
It's not about can't but won't. The feedback loop is basically as the problem gets worse more people give, but as the situation improves fewer people give. Thus, cheraties won't fix any problem that requires regular funding.
The problem is, you need quite a bit more money than charity can give.
People just aren't generous enough for it timescale, the example elsewhere in this thread of universal healthcare is a good one.
Actually they are[1]. And if you want to consider things like roads, railways and other infrastructure -- think about how almost every private institution that built that infrastructure went bankrupt and had to be bailed out by the taxpayers. A lot of the "government is inefficient" talk comes from people who want all regulation to go away for their own benefit. A little searching will also show you a long list of private industries and institutions with equivalent amounts of waste, corruption and poor planning.
> think about how almost every private institution that built that infrastructure went bankrupt and had to be bailed out by the taxpayers.
Did they really, though? "Have to be" bailed out I mean. They were bailed out, yes, but... just as a thought experiment... perhaps we should have let them go under?
Edit:
Going bankrupt implies either mismanagement, failure to lower cost and increase margins, or the market does not value their service.
If it is the first two, going bankrupt will potentially allow them to sell off their assets to new management who might do a better job. If it is the last one, then they should be shut down.
All the government bailing them out does is prop up bad management and artificially lower prices at the expense of the tax payer having to pay them on the other end. (me paying for half empty train cars even though I haven't ridden a train in years)
> Did they really, though? "Have to be" bailed out I mean. They were bailed out, yes, but... just as a thought experiment... perhaps we should have let them go under?
Often they weren't bailed out; often their shareholders lost everything or very nearly. Nationalization was more akin to the government picking up the assets in a bankruptcy auction.
Nobody ever argues that roads, railroads, and highways are an unfair tax burden. It's such a ridiculous straw man. The beef that most Libertarians have with government spending is with entitlement programs.
The point is that it is a thing, but it's not a thing anyone here is defending. There is no point in arguing over the things you already agree about.
Here's an example of actual government waste. The ACA provides subsidies for low-deductible health insurance. Those plans are less efficient than high-deductible plans because the plans cost more (to the government and the patient), and because the act of laundering the cost of routine care through an insurance company causes healthcare costs to increase because insurance companies are less price sensitive than patients.
The government does this out of regulatory capture. Health insurance companies don't want people using less expensive plans and health provider companies don't want patients to be price sensitive.
Do you disagree with that? If so we can have a discussion. There is no discussion to be had about whether there should be public roads.
You could say charities are better in the sense that:
- You at least have more than one choice. If the charity you give to performs poorly by whatever metrics you value, you can give to another one next time.
- It is voluntary. Nobody with guns will put you in a cage if you don't donate to a charity, as is the case if you don't pay your taxes.
> ...performs poorly by whatever metrics you value...
And there's the rub. You don't, and won't, have that information.
To my knowledge there's one single solitary charity that provides adequate metrics to donors to support this kind of decision and for them it's on principle rather than to open up the market.
Charities as a whole are simply not incentivised to share this kind of information because they compete for funds based on marketing, not efficiency, and there is currently no mechanism to change that.
Yes, there are organisations that audit charities in small numbers and put them on approved lists, but you're still only getting a fading rubber stamp.
> It is voluntary...
He said, casually cutting the funds available for public infrastructure, welfare, health, education and the military by a couple of orders of magnitude.
Couldn't you say that about whatever city that you live in? Many people voluntarily live in their choice of city or state (in the U.S.). If you don't like that government's priorities, you could move elsewhere.
With charities you can always make your own. Don't have that option in your system.
I'm not American, but aren't some taxes that go to education/welfare/healthcare on a federal level? If so, are you going to tell people to leave the country? It's very expensive and for many practically impossible.
Besides, is the goal not here to spend the money as efficiently as possible? In that case we need as much competition and experimentation as possible. Something I think is achieved to a much higher degree with my system than yours.
Also, your suggestion still doesn't make it voluntary. In my system someone can not donate to charity, but use their money for something else. Charities are not the only way to help the worse off.
You do realize that government actually doesn't earn the money but takes it away from others that earn it.
It's not as if with government we have more money. So all that matters is efficiency and if a charity is more efficient than a government, why is there no state where you can choose whom to give (at least part of) your taxes?
This is a common fallacy, which hurts the ability to reason usefully about problems like those in this thread (regardless of where you fall on the "size of government" issue).
The fallacy is in imagining it is meaningful to separate money (earned or otherwise) from the system of government it was generated in. Your ability to "earn the money" is fundamentally tied to this system, and if you change one, you change the other necessarily (not a comment on the direction of the delta). Thinking about the economy as a thing that exists on its own, and the government as an institution that just "takes away" from this is just nonsensical.
The statement "It's not as if with government we have more money" is quite likely a category error. After all the ideas of money and the ideas of government are so deeply intertwined in their evolution that people haven't managed to separate them, ahistorical thought experiments in common introductory economics notwithstanding.
For what it's worth, I am sympathetic to some of the arguments you are heading towards, I just object to the sloppy thinking variants of them - which are the most common, unfortunately.
I think you are the one who is ahistorical. Even in the most failed of government systems, anarchist societies and black markets: people engange in economic activity ("earn money").
You don't even have to look at history, you can look around the world today with failed states and black markets. Wherever there are people there is economic activity ("earn money"). If there is no state, groups and individuals take upon themselves those roles which the state has monopoly in most places: protection of private property and dispute resolution. These two things are the most vital ingredients for economic activity.
> After all the ideas of money and the ideas of government are so deeply intertwined in their evolution that people haven't managed to separate them
You're just making an unfounded assertion. Many people separate economy and state, for good reason. Money have existed and exist today (cryptocurrencies for one example) irrespective of government.
I think you missed the point I was trying to make, so I will try again.
[edit: I had a longer response but realize it opened up a bunch of side issues that weren't helpful]
The economy and the system of government it operates in (yes, including black/grey markets) are fundamentally intertwined in ways that make it hard to reason about separately.
What I'm objecting to are statements that boil down to:
"If we all paid X less tax I would have X more dollars which we could do as we please with". In general this is hopelessly naive.
For what it is worth, both your examples of failed states and cryptocurrrencies (which do not, yet?, operate as currencies) support exactly what I am talking about, not the converse.
The attempt to divide an conquer in thinking about economies and government is useful but so far not completely successful. When it leads to people making silly inferences, it is problematic. So yes people talk about them as if they were separate, because it is easier. But that is not the same as having separated them.
Government is an inextricable component of the marketplace in which these earnings occur. Money is an emergent effect of economic activity, not an a priori fixed quantity. So, yes, we do have more money because of government.
Furthermore, the idea that private charity is inherently more efficient than government is far from self-evident. A basic income policy, for example, could be a far more comprehensive and efficient way of directly addressing poverty than a patchwork of charities targeted specific symptoms of poverty. This is one reason that many pragmatic libertarians are actually favorable toward basic income.
> why is there no state where you can choose whom to give (at least part of) your taxes?
Many states have tax deductions on charitable donations. They're mostly used by wealthy people to shirk their taxes by "donating" to a "charity" that serves their own interests (e.g. "donating" a valuable painting to an "art museum" they establish next door to their house, open only by appointment with them).
I think the idea is that the amount of money being spent by the government to try to solve society's woes is absurdly high and kept artificially high by turning charity into entitlements.
> Private charities come nowhere near modern government levels of welfare, and never have
Neither does the government, if you measure it that way.
The amount of government money that goes to the homeless or the bottom 5% is fairly modest, because they aren't a large percentage of the population.
Most actual government "welfare" spending is the government taking $5000 from you in taxes and then offering you the $5000 back but only if you submit to their conditions on how to spend it.
You are correct---in your system, someone can be surrounded by a society that is fundamentally positive because no one is wanting for basic needs, and leverage that fact to be wealthy because they don't have to worry about a certain class of problems, yet not contribute back into the system that has allowed their wealth to accumulate. This is as much a choice as a welfare recipient who could work, but is choosing not to. Arguably, that society isn't really possible, though, since given the option of not contributing back into the system, there is a high probability that those who accumulate wealth would choose not to do so, especially if it's inherited, and so even if you could trip into a society that met basic needs for everyone through the wealthy choosing to contribute, it would likely vanish in the span of a generation or two. Evidence for this being that we've had societies where the wealthy could choose not to contribute to their society for millenia, and meeting basic needs is something we've only started brushing at in the last century.
By the way, no, the goal here is not to spend the money as efficiently as possible. The primary goal is to succeed at something that is known to improve society as a whole and, perhaps, will allow that society to produce goods better and more effectively. The secondary goal is to do so as efficiently as possible. This is why you don't find much support in countries with nationalized healthcare for abolishing nationalized healthcare; instead, the support is for reforming it or making it more efficient or less corrupt or what have you. The primary goal met, it's on to the secondary goal. Before government was used as a vehicle for achieving many of these things, they simply weren't an option for most.
Government is where we come together as a people and say "yes, this is the cost that we have decided is worth paying in order to have the society that we want". That encompasses both sides---taxes ("what is worth paying") and policy ("how we achieve the society that we want"). Let's grant that there might be less competition and less efficiency (arguable), but there is greater universality, and I would say there are goals where that universality is far more important than the tradeoffs.
The problem is that inneficient systems can only work in best case scenarios. The minute a country with an inefficient universal health care system gets inundated by immigrants or has to ramp up its defense spending or loses one of its primary sources of revenue, the whole thing comes collapsing down (see Venezuela).
>Government is where we come together as a people and say "yes, this is the cost that we have decided is worth paying in order to have the society that we want".
In this way, it is the largest form of organized labor. When something is decried for 'inefficiency' we should examine what we are trying to do efficiently. For example, reducing costs of health care by negotiating drug price ceilings as a group in UK/Canada compared to much higher US drug prices as a result of rejecting these policies due to perceived inefficiency. This perception is ideological, in the mind of many Americans market equillibrium is always the most efficient pricing, this measure of efficiency is not related to the amount of healthcare delivered per dollar spent.
> This perception is ideological, in the mind of many Americans market equillibrium is always the most efficient pricing, this measure of efficiency is not related to the amount of healthcare delivered per dollar spent.
The "market is efficient" assumption is voided by the bastardized healthcare system in the US.
In theory the reason we have drug patents is that if you create an important drug, you get a temporary monopoly that you can use to make a lot of money, so people will have the incentive to create important drugs.
The benefit is supposed to be that the market sets the price. Until the patent expires, you pay exactly as much as the drug is worth, no less and no more.
But if the government (or even a large enough insurance company) is paying then there is no market, the buyer has pricing power. The only way the patent system produces the efficiency it's supposed to is if the patient pays for the drugs. Without that you might as well get rid of drug patents and just use tax money to fund drug research directly.
But if you talk about either getting rid of prescription drug coverage or getting rid of drug patents, politics enters and we get the inefficient catastrophe we have.
Nope. If you have a problem with the federal government (e.g. US military spending) of the country you are a citizen of, then you actually have a lot of difficulty moving to another country (unless you are rich).
> - You at least have more than one choice. If the charity you give to performs poorly by whatever metrics you value, you can give to another one next time.
You can vote out your government.
Charities seem more PR-focused, and the press seems less interested in holding them to account. I have a lot more faith in government to spend money effectively than I do in private charity.
It's not an entitlement per se, but Head Start is a classic example of the government program that doesn't work, but can/t be cancelled. Even DHHS admits it doesn't work[0], but it's impossible to cancel politically.
In my experience, every large organization is terribly managed and inefficient. The government not noticeably different.
I guess I'm saying I don't mind paying taxes.
I consider the tax rate when choosing how much to charge my customers. I'm sure you do the same when choosing a job. If you paid less in tax, you'd earn less money. Obviously not at a 1:1 ratio, but it's something to keep in mind.
Spot on,anecdotal evidence ahoy but I'm a contractor so I move around a lot in the last few years I've worked for a government department, a mid stage medical startup, a late stage startup, a large corporation, and a very new startup.
The efficient ones have been the smaller companies in everything from decision making to process. The gov department and large corp are Kafkaesque nightmares where getting an account is a 3 page form and a 5 day SLA.
At the medical startup I was given a laptop and asked for a PR by the end of the day, at the large corp I didn't get a laptop for a week and even then I didn't get logins (yes, logins...) to the code repo for another week.
Governments are inefficent because they are made up of lots and lots of people, same as large companies. Everything needs to be triple checked, rubber stamped and have all people in the chain cover their asses because if anything goes wrong it's very important not to be anyone's fault (but it's definitely someone's fault. This isn't a blame free post mortem here!)
A large company once hired me for a 5-week project. I got onsite and made my reqs for laptop and access. They gave me a badge at the end of week 1. I received the laptop in week 3 and the accounts were setup in week 4. Happily, they paid for the entire time.
Even as the very cautious spender I'd imagine I have wasted at least few hundred dollars between me and spouse just since new year. So at large scale even larger wastage does not look inconceivable.
Great idea. Let's donate to a charity to pay for the fire department. And the police. And schools. And transportation infrastructure.
Wait, what? No charities exist that create these organizations? Oh darn, hoist on the reality petard, whatever will we do? Pay taxes you say?! But no, let's just have smaller government! Nevermind that we will have children with lead poisoning, plant workers with cancers, or zero safety net for the elderly, working poor, or disabled. At least I won't be paying taxes!
People always say this, but nobody can ever point to a solid example. Do you have hard numbers that government social programs are less efficient than charity?
Just because one branch/department is wasteful doesn't mean others are. Trim that military budget and you'll start seeing efficiencies simply because they don't have that extra trillion to spunk up the wall.
The road out front of your house costs $100,000 to build. You just using that, gets you back all the taxes you spend. Now multiple that by 10 million things, and you are still better off.
The federal gov't spends less than 2% of the budget on ground transportation (roads, bridges, and even amtrak included in that number). So, no, the road out front doesn't in fact get us back all the taxes we pay
Given that all the taxes go to perpetuate a system which allows the US to be successful, I think it's hard to make a case that overall the majority is not working usefully in some way, even if not obvious. I think it would be hard to make a case that if the government ceased to exist tomorrow and no more taxes were owed, we would all be better off.
I live in India, one of the most corrupt countries that I have lived in. I cringe paying atrocious taxes. I shared your sentiment for a long time but these days I just am happy to pay whatever taxes like Bourdain says. To me personally, the effort required to optimise taxes is better spent elsewhere. Which is also why I cringe when startups talk about optimising taxes before even making a dime in profit and fall prey to registering their companies in low tax regions.
Tons of Charities pay their CEOs a shit ton of money. Boy Scouts CEO made 1.6 million as of 2010. I think it was Operation Smile that paid theirs over a million as well.
He made 1.6 million because he deferred his compensation the previous two years. And he also retired and got some money for that. So you're basically looking at what he made for working for 3 years, not what he made in 1 year.
It's still a lot of money but nowhere near what you're implying.
Exactly. All a non-profit means is that they don't set aside money as "profit". They can still pay themselves outrageous salaries. It's also why rich people set up "foundations".
The counterargument is a well-intentioned but clueless volunteer should not be in charge of directing millions of dollars in donations. I imagine it's hard to find someone with skills to efficiently run a large organization without paying them an industry wage.
By global standards, the US government is spectacularly honest, effective, and efficient. That's one reason the US is so attractive to foreign investment and foreign entrepreneurs.
Charities and private businesses actually succumb to corruption, inefficiency, and outright fraud pretty often. How much research do you perform on your charitable contributions versus your taxes? Do you know, off the top of your head, how many cents on the dollar actually support the cause of your favorite charity, and how many are "wasted" on administration?
The problem (IMO of course) is that there is no better and attainable option.
For in the current system, you broadly have the choice of:
1. Wasting your money on exotic weaponry and wars of expansion whilst starving the populace and enabling a small subpopulation of rich cheaters to dodge their fair societal debt
2. Wasting money on enabling social programs that allow a large subpopulation of poor cheaters to dodge their fair share of societal debt and hinder the rich from buying a second yacht.
I believe South Park refers to this as "Giant Douche vs Turd Sandwich."
Sadly, in both cases, the upper middle class ends up footing most of the bill.
The past 2 months have illustrated the sort of alternative that can actually get elected here. Do you find this encouraging? I don't.
Well yes it is actually, by collecting more data, you are doing a better job marginalizing the distribution of government corruption and waste across the planet. And that can make a seemingly bad thing turn out to actually be relatively good and vice versa.
Or, to quote some famous dead dude:
"The World Is a Book and Those Who Do Not Travel Read Only One Page" - St Augustine
Or, to quote Anthony Bourdain himself:
“Travel changes you. As you move through this life and this world you change things slightly, you leave marks behind, however small. And in return, life—and travel—leaves marks on you.”
But I'm not talking about relative goodness or badness.
If I say "boy I'm tired today, I only slept 4 hours" and you say "you're tired? I didn't sleep at all!", your being more tired doesn't make me any less tired.
In the same regard, other governments doing a much worse job than the US government doesn't mean that the US government is doing the best job that it can.
Sure, that's possibly true. But if the ensemble of governments planetwide are mostly doing worse than the US(1), then you need to consider it might not be humanly possible to do much better even if it's obvious how to do better theoretically.
But, by all means, go get some billionaire to buy you an island or build one for you to test out your ideal black spherical cow ideas for government. The US itself was once a crazy experiment in cutting edge governing theory itself.
That charity doesn't exist without our government to setup and run the legal, tax, postal, transportation, employment and other systems that enable the charity. Just sayin'...
Jennifer Pahlka - the founder of Code for America - did a talk recently at the Long Now Foundation that digs into this idea from the perspective of government technology development and use.
The feeling I got after listening to her discuss the obviously broken system for creating of procuring government technology is that people are earnestly trying to produce quality tools, but are forced into ridiculously slow improvement schedules due to the procurement standards and laws.
It talk includes, of course, a call to arms for tech workers to invest in their government by doing a term of service, fixing government by improving its tools.
>I'd rather give it a charity since then I'd know a majority of it had an impact.
A few years ago, I wish I still had the link, I read an article detailing exactly that topic and the gist of it pretty much boiled down to: What the US lacks in "welfare state" it makes up trough donations to charities by private citizens, one of the major differences between Europe and the US.
As nice as that might sound, it's also an incentive for the government to keep on cutting spending on social welfare as it assumes the private donations to charities are gonna make up for the difference.
The amount of waste and corruption in charities should not be underestimated. Of course a lot of them are doing good work, or at least think they are, but there seems to be an increasing amount of charities existing to enrich its owners/founders/etc by spending a very small percentage of their donations on what they actually say they are doing while the rest goes to the administration of the charity or somesuch.
The government provides the money you don't want to throw away. Arguably the money has value because it's got a built in customer - the government - in the form of taxes. That's got to be worth something to you, even if you don't like everything else the government does.
Proudly paying your taxes doesn't mean you don't recognize that the government may not be the most efficient organisation around. It doesn't mean that you agree with the decisions being made. It only means you agree that something between X and Y% of taxes needs to be paid to operate a country smoothly. And I've delegated the decision of what exactly to spend it on to others, so I accept that I can't always be 100% happy with the choices.
The amount of waste, corruption and poor planning by the gov't [..]
Companies do the exact same thing. How much money is wasted by the next failed IT project? Poor planning, check. Funnelling money to their own pockets and those of their friends? Check.
Governments aren't the most efficient organisations around. But Western governments certainly aren't the worst either.
They waste your money by charging you higher prices. And their competitors do the same thing. You don't pay the lowest possible price for everything. Free markets are a utopia: they don't actually exist.
Exactly I worked at one company where someone spent 15 Man Years and a million pounds reimplimenting a system in Oracle because it was "company standard".
They did this to tick a box for promotion to the next level - not the best use of the share holders money
"Nobody likes paying high taxes, but I don’t mind."
I think there's an important distinction to be made between two different sorts of "high taxes".
One is a high absolute amount of taxes - you made millions of dollars in a year and therefore your absolute tax payment is relatively quite high.
The other is a high percentage tax rate.
I don't mind paying a high absolute rate of taxes - I think that is the scenario in which one can think fondly of all the things that government provides - things like:
"It's a repayment for all those years I was poor and the government paid for me to live and go to school."
However, there comes a point in percentage tax rates where basic fairness comes into question. I'm sure it varies from person to person, but I think an effective tax rate north of 40% is getting in the danger zone.
As a US citizen who lives in California, in Marin, and owns land, my effective tax rate is 50%, give or take, and I think that's a problem. It's very difficult to rationalize that every 60 minutes I work, ~30 minutes of that work product is appropriated by government.
every 60 minutes I work, ~30 minutes of that work product is appropriated by government
How about every 60 minutes you work, 30 minutes of that is spent establishing the world around you? From the opportunities you had as a young person, and those of your children, to the safety and security of your adult life.
Half of your product is yours to spend freely, the rest goes towards the idea that you don't even have to think about mashlovs piramid. Well in a perfect euro-socialist utopia maybe, perhaps not in the U.S., but that's the general idea of high taxes.
Except for here in the states 25% of the taxpayer money is going to military, intelligence and debt from past wars we know to have been bad ideas and knew all along were bad ideas.
And let's just say another 25% is misspent. In a country this big and bloated, that's also likely a low ball figure. But overall, only 50% of taxpayer money is going to anything remotely properly executed and needed.
That said, our public schools suck, we invest nothing in research, we don't provide healthcare until your old, and our interstate highways were built 70 years ago, and state and local governments handle needed construction now, yet they take the smallest percentage of our taxes. Some states like Nevada don't even charge state income tax.
In my view I'd be way happier paying taxes if this was managed right. That means cut military spending by 90% knowing we are never going to need an aircraft carrier again while completely evacuating the Middle East, and the state local government's charge more since they will be more effective at putting it to use.
Taxes should be no more than 30% total (federal, state + local) like the Apple App Store.
Yea, likely not happening any time soon. But that's what is correct imho.
On what basis do you think that you think you can write off 25% of non-military non-debt government spending? Is that just a hunch?
I would suggest trying it sometime. Look at the US government budget, and try to cut out 25% of it. It is a lot harder than just getting rid of "bloat".
I can believe that some people might be able to find 25% that they personally don't care about. Maybe you don't drive, so (you think) you don't care about highways. Or, you're not poor, so you don't care about medicaid. And so on. But could you cut 25% of the federal budget without causing a large fraction of the American populace to become very, very angry (and vote you out of office, git reset --hard your budget in two years, etc)?
I don't mean to say that the government could not be more efficient. It certainly could. But 25% of the budget is a lot of money, and not everyone has the same priorities as you.
> That said, our public schools suck, we invest nothing in research, we don't provide healthcare until your old, and our interstate highways were built 70 years ago, and state and local governments handle needed construction now, yet they take the smallest percentage of our taxes. Some states like Nevada don't even charge state income tax.
Don't forget we build highways with the wrong material which causes a cheaper initial cost and higher future cost. (Concrete rather than asphalt)
> Except for here in the states 25% of the taxpayer money is going to military, intelligence and debt from past wars we know to have been bad ideas and knew all along were bad ideas.
I don't disagree with your point (about wasteful spending on the military), but your number is substantially inflated and you're wrong on the financial conclusion.
The federal + state spending is $6.x trillion, soon to be $7 trillion. Closer to 10% of tax payer money is going to the military + intelligence. Federal debt service is closer to 5%-6% of the US Government's revenue year to year; less than half of that net cost is due to war.
Entitlements are by far the largest budget problem the US has, there isn't anything else even remotely close at this point. Within ten years those entitlements will balloon the US budget deficit back above $1 trillion, the military spending increases - which I disagree with - are comical next to the entitlement costs inbound. Unless you're planning to abolish the entire US military, you're not going to be able to financially resolve the truly epic entitlements funding shortfall just through military reduction. Even slashing the US military in half won't come close to fixing the problem (~$300 billion versus an inbound $1 trillion annual entitlement shortfall).
I admit my numbers were rough guesses. That said, I don't think really anyone can know--e.g. "black budgets" etc. But basically if your numbers are somewhat correct, I was only 2x off. You're stating 12.5% goes to essentially military. That's a lot. In addition, it seems that veterans are one of the biggest, if not The biggest entitlement--again, more military.
...a quick search shows this article saying 16% is going to defense:
I also read recently something to the tune of: 70% of our national debt comes from military related expenditures from the 2 Bush presidents, and by 2020 interest payments will go from 5/6% to 10/12%. What about the principal? When does that get factored in?
I admit I'm not an expert on these matters (as i chose to focus on what i can change). However, there does seem like there are various discrepancies here--so what if the number is closer to 18% vs. 25% or 12.5%. It's way way way too much and would make a difference--more importantly in the lives and hatred abroad we would be sparing. We didn't fix or help anything in Vietnam and no matter what they say, we haven't in Iraq or the Middle East--our selfish financial losses aside.
However, now imagine instead of taking out credit for those wars, we invested. That would be paying major dividends that would further counteract these numbers. Now imagine we invested in ourselves (not just financial instruments)--the potential is far higher.
Military spending without a doubt has put a damper on our progress and perhaps the sole reason America may never reach the potential it once had. America was never great--rather, it had potential to be great. Now it's mediocre, and other countries are eating our lunch, and rightfully so. Not that the world is zero sum--but we'd stand to benefit from taking a page from their playbook (e.g. nordic countries, etc). We have shitty education. We are well on our way to becoming idiocracy. We unfairly lock up way too many people for far too long in shitty prison conditions (and then let corporations exploit them for cheap labor!). We have plenty of money but we spend $11 Billion on the Airforce One and Marine One fleet. That would put $33 in every american's pocket. Our expenditures from the Middle East since 9/11 would put like $30k in each american's pocket. If that was $5k over 6 years, that's life-changing money for half of america. ..This country is just ridiculous. Paying 50% of your earnings as taxes in California is absurd. It's a crime. There's no point owning (why pay that 1% property tax), there's no point making lots of money. Just rent, make far less, and work way less hard--what sort of incentive is that! That said we have a problem of working too hard and too much in this country (at least for people of a certain class)--so from that perspective perhaps it's a good thing. I rather make whatever that sweetspot income is from a taxation point of view ($75k?), rent, not try to make billions from my startup and live a simple life.
And yes, we should cut 90% of our military. Instead, we maintain an arsenal of super modern nukes and a small extremely efficient elite navy-seals-like task force. + Yes, the best cyber-security outfit on the planet (while somehow keeping surveillance on citizens to a minimum). But fire most people in camouflage uniform.
Gun-to-your-head "peace" is not peace. There is no world peace. This "peace" we have enforced will not less forever. As soon as china knows they can beat us they will make us pay for our sins in one way or another. We need to become more cooperative now and show the world how to act NOW while we're on top, cuz once we're not we won't be able to set such examples. We aren't cooperative. We are forceful. Again, it's gun-to-your-head peace. The lessons of history clearly indicate to me that it's a recipe for disaster as those hungry come up from behind you and use the ugly strategies they learned from you against you. These are basically life laws we're talking about here. So we aren't setting a good example. We haven't created true peace. It's temporary peace. And things could get catastrophic unless America completely changes its ways. I'm not even saying gun-to-your-head "peace" wasn't needed to get to this point, i.e. the most peaceful point in human history. I'm saying it's run its course, and if we continue to operate that way, we'll regress--and regress bad!
So why not save some money (AND SOME LIVES) and show some real leadership. Real leadership is about taking risks. Risks and faith are what it's all about. As powerful as the US is, it has an opportunity to set that stage. That would be the turning point in human history that civilization has been looking for. It's the next evolution. We have that opportunity right now. We are on the precipice of a turning point while things are still relatively stable. Cut the military, we don't need it. Save us some dollars and focus on education.
The problem I have, and that I think many people have, is that fraction: 30/60 = 1/2 = getting a bit silly.
But why? I mean, are you just rationalizing? "I think 50% taxes is a lot just because I do, therefore I think it's bad policy." Or is there a logical reason that 50% is "a bit silly" but, say, 30% (or whatever your number is) is fine?
This is something that Nobel prize-winning economists fight over -- exactly how high a tax rate is too high? -- so I kind of doubt we're going to resolve it here on HN. My point is that we all have feelings ("I don't like the color mauve", "50% taxes rubs me the wrong way"), but these have to be separate from motives for enacting policy.
>You're only 1/2 way away from slave labor at that point.
No one getting taxed at an effective 50% tax rate in the United States is anywhere near a slave. The minimum wage McDonald's worker with a 15% tax rate is the slave.
We as a society went to war with companies over how much time they can require of us. Nowadays companies can only require us to work roughly 23% of the hours in a week.
50% is 84 hours/week, we as a society have already deemed the difference between those to be significant enough to fight about.
The difference between 50% of your income and 30% of your income is significant.
No, you're just 1/2 away from the point where your return on investment is not justified. And that's fine; there's a lot of perfectly valid reasons a situations where working is not worth it.
"But why? I mean, are you just rationalizing? "I think 50% taxes is a lot just because I do, therefore I think it's bad policy." Or is there a logical reason that 50% is "a bit silly" but, say, 30% (or whatever your number is) is fine?"
No, I don't think I am rationalizing or being irrational.
Note: I don't make any claims to know what the right overall tax rate is - if you're asking me about 32% vs. 38% vs. 29% ... I am as lost as you, and those economists, are.
However I think that 1/2 is not an arbitrary point on that scale - I think there is a qualitative difference between more than one half and less than one half.
If I am assessed more than one half of what I earn, that's unfair in a way that I believe appeals to innate concepts of fairness that we all share, rather than "I just don't like that number".
That's the American right propaganda sinking in. Times of higher tax burden have been economically more productive. It's already the government's money. Redistributive taxation is parsimonious use of funds.
"Times of higher tax burden have been economically more productive" -> this is just false, a falacy. Prove it somehow.
Sweden was a very rich nation before high taxes, now it's just rich, net jobs after high taxation in 50 years is ZERO. They are just letting go now, cutting taxes more and more.
I wonder why US economy is booming right now, maybe because Trump is going to cut taxes?!
Well, the government has defended you from foreign threats, protected the monetary system that lets you earn in the first place, provided for your public education, established your infrastructure, and been a check against your home burning down or being robbed. If everyone's entitled to what they've done, what are they entitled to?
Capitalism is a system, like any other, created by humans and not found in nature. "Ownership" is not some property of matter; what it means to own something is that there is a legal system that supports that deed and an armed police and military to enforce it. There is no concept of ownership except for a truly anarchic "everything I own is in a box that I have the key to" idea that does not require other people to guarantee your property rights.
Oops my ass. The US economy is not booming - the US stock market is artificially inflated because investment speculators are betting that companies are going to use this obscene period in time to take advantage and do whatever they want to increase corporate profits in further concentrate the wealth in smaller and smaller circles.
what about passive income i.e. 0/60? Should that be taxed at 99% since you're not spending any time working for it? Conflating time worked with a tax rate seems like a red herring to me.
I always think it's interesting how we actually tax capital gains much less than normal salaries. It's weird that that income doesn't need to contribute to our society and help pay for things like Medicare but income that you work for does.
My understanding is that there is some fancy economic theories that say this is the right way to do things that I don't have the knowledge to confirm nor deny.
Economists aside it still feels wonky™.
That's the problem. You should never be responsible to judge how he spends his money, that's his problem.
You never know. You don't know if it was only 10%, he could use those 40% much better than the "government", oh hell, be damn sure he would.
He could create companies, could fund companies, could put this money in funds, those funds would have to fund companies to earn money, these would generate jobs, education, etc.
Man, why does everyone assume that rich people just take their money and start companies? Do you realize how risky it is to start a business? You are highly likely to lose EVERYTHING you invest, as well as ruin your reputation, if you start a business from scratch and it fails to take off.
Almost all wealthy people just invest their money in stocks, hedge funds, VCs, and other intangible assets that don't immediately produce a noticeable economic impact, aside from a rise in the stock market.
What do you think the purpose of stocks and venture funds are? They are for starting and growing businesses. He/She doesn't have to start the business themselves.
I'm sorry, no knock against you, but that's the stupidest thing I've read in a long time. It starts at 35, than 40, than 45 than 50 and on and on until eventually 75% is towards everything else while your neighbor contributes nothing. Doesn't seem like a formula for success.
It starts at 15% and then 30% and then 50% and then everything you do ends up in one big pot and you have communism. And your neighbour is happily doing nothing while you slave away, who is stupid then?
The problem is that those other 30 minutes are _not_ establishing the world around the person, but rather sustaining irresponsible worlds filled by others aggravatingly often, no?
Opportunities as a young person costs 50% of what he makes?! Please don't pretend to be naive.
I thought it was common sense by now that this tax money goes to highly payed politicians, corruption, bad public administration, bad public programs, lazy people, etc.
A 10% tax should be the maximum a citizen should pay in any country.
And it will be in the future, distant future, but you can be damn sure that it will be.
Wrong, they should be happy it's not 90% or 100% of what he makes. Don't be naieve, why would you deserve anything when there are people who could wipe your life away with the stroke of a pen. Don't pretend you've deserved anything you've worked for. It has been granted to you by those in power as they have seen fit. Your petty idealism has no place in the real world.
You meant is a your utopian society. People who can make money can survive. People who can't are left to die. People who can protect themselves can survive. People who can't won't.
See people cheering the cutting of funding for Meals on Wheels make me want to vomit.
> How about every 60 minutes you work, 30 minutes of that is spent establishing the world around you?
Sure, if by "establishing the world around you" means government spending on fighting climate change, supporting clean energy initiatives and helping the underserved people instead of spending on wars, on weapons; AND everyone pays the same rate including our current president, then YES!
So don't look at it as percentages. Look at it as a question of how comfortable is your situation. I'm in roughly the same position as you tax wise. We pay slightly less, about 48%, to taxes of one form or another. However we're comfortable. Minus the mortgage we're debt free, our lifestyle isn't extravagant but we rarely can't do or have the things we want due to money. Solidly upper-middle-class (for SF).
I'm perfectly happy to pay more than most to support others, because I make more than most in income. I can't honestly say that in my day-to-day life I work harder than the person delivering the mail, or someone unloading crates. I was given the advantage of good and cheap education and a safe environment to grow up in (Marin) due in part to high taxes on the wealthy. I feel it's important to do what I can to return the favor.
I also strongly believe that those above a certain threshold of wealth, especially those who hoard that wealth, are doing damage to the economy through income inequality. If taxes are the means to undo some of that damage then again, I'm happy to contribute.
During my 60 minutes of work I was able to: breath clean air, have potable water, be surrounded by an orderly society, and in the event of danger have access to emergency services.
Well, you also got to wage wars in various countries via drones and residual troop deployments and special operations. That takes up quite a bit.
Also, you got to enjoy having a basic pension after retirement, as well as free healthcare for the elderly and poor. Who wants to live in a country with a bunch of poor and old sick people who can't afford food and healthcare? That sounds depressing as hell.
If you are in high a tax bracket you are actually paying way more to pension than you get back. If you saved the money yourself you would be better off.
Sure, but I believe in a progressive tax structure, so allowing wealthier folk to contribute even more to their retirement isn't anywhere near my top concern.
The amount of money you need to live on decreases relative to your income, as your income goes up. A wealthy person doesn't contribute 30%+ of their monthly income to housing, typically, nor could they come anywhere near spending that amount on food. But a poor family of 4 certainly could.
No, I don't make the decision on what to spend it on, the democratically elected legislature does. And if money is misspent, take it up with your elected officials.
Do you honestly believe that taxation is theft? It's existed as a fundamental requirement of civilization for millennia.
Utopian libertarianism is utterly unrealistic. For a philosophy that is wholly meritocratic, you would think the fact that no civilization adopted it as a fundamental principle would make it obvious how infeasible the concept is.
Is 50% your ETR if you only look at INCOME taxes (federal and state)? If so, you're probably an extreme outlier.
Or are you including payroll "taxes" (social security, medicare), sales taxes etc also?
IIUC, if you add up health insurance premiums (employer share + employee share) + all income taxes + all payroll taxes of US and compare it to the same quantity of other DEVELOPED countries, the tax burden on the US is not unreasonably high.
Keeping a developed country developed is hard/expensive. :)
> I think an effective tax rate north of 40% is getting in the danger zone.
I think it varies mostly depending on the services you get for it and the percieved values of it. If you get higher education, healthcare and very social safety net possible then you tolerate a higher tax level, presumably.
If the tax is percieved as being spent on things you don't agree with (some random war etc) then it's harder to accept.
> It's very difficult to rationalize that every 60 minutes I work, ~30 minutes of that work product is appropriated by government.
If you consider that money to be appropriated then obviously there is a political problem. The money isn't spent on the services you need or want, or it's (seems to you at least) a lot of it is wasted. But there is no point discussing an absolute limit of fairness without discussing which tax paid services you would like to cut in order to lower taxes. Taxes could be 90% or 99% and there would be nothing inherently unfair about it - it would just proably be a very inefficient society.
For this to be true, your income must be in the realm of $10 Million / year. If that's the case, congratulations—that is phenomenal. But pardon me for not crying you a river ;-)
"For this to be true, your income must be in the realm of $10 Million / year."
No, the threshold is lower than that.
Of course I don't count assessed property tax, since that is based on assets, not income.
But I do count parcel taxes[1] which occur per-parcel, regardless of value. USA + CA + Marin County.
Note, I am not losing sleep over any of this and I don't identify myself as anti-tax, by any means. I just think it's worth considering that a qualitative change in taxation has occurred once you go north of the 40% number.
Not if you include CA state taxes and property taxes. You can pretty easily hit 50% somewhere north of 250k, which for a 2 income household in the bay isn't outlandish.
I agree and think that total tax rates should be capped at a far lower amount.
At some point in running your own business you realize that large portions of the tax code exist to throttle back the rate of growth of smaller companies while giving away money (tax breaks etc.) to large behemoths.
I feel the same. I would have no problem with this rate, but I would like to see some things done better. How money is spent, how gov contracts are given out.
It feels like there is a huge amount of money lost on inefficient markets and efforts.
I agree with you. The poor can be affected by this as well, in the case of fines. A $150 speeding ticket isn't more of an inconvenience to most of us, but a poor person could be ruined by it. Nobody should escape consequences entirely, but I think the poor should be given some exemption from the governments iron-fist policy with fines, penalty fees, and bench warrants when you dont pay them.
There's a simple solution: here in Scandinavia at lot of monetary punishments are based on your income. E.g. your speeding ticket costs you a week's pay.
(Yes, tax evaders get off too easy with this system)
In the context of living a debt-free existence, I have to disagree.
In the monetary policy environment we live in, having debt is the most sensible way to build wealth.
Dollars are a terrible store of value. Dollars invested in a savings account are almost as bad. Securities, real estate, and inventory are much better. Dollars invested in education and advertising to multiply the value of securities, real estate and inventory are still way better than a savings account.
In an environment where a savings account pays <1% and collateralized debt costs 1-8% and non-collaterlized debt costs 10-20%, the sensible thing is to borrow as much as you can and invest it wisely.
In such an environment, I'd be proudest paying cap gains tax at 15% than income tax updwards of 25%.
A lot of people get confused when talking about debt just because types of debt are different.
Using debt to generate income = good.
Using debt to buy stuff you can't afford = bad.
The first pays itself back while the latter does not.
When somebody like Dave Ramsey is talking about debt, he's talking about paying off credit card bills, car loans, student loans, mortgages - payments that you're making that leave you personally saddled. Increasing your cash flow by decreasing your expenses.
When somebody like the Robert Kiyosaki (Rich Dad, Poor Dad) talks about debt he's talking about it in the context that you are: using debt to create an income generating asset, leveraging the tax advantage to increase cash flow and holding the asset as more valuable because held cash would simply result in devaluation through inflation. Increasing your cash flow by generating more cash flow.
Headlines should really start trying to clarify Bad debt vs Good debt.
I think your being a bit generous. I listened to the entirety of Dave Ramsey's 'Financial Peace University' series and I don't remember him once mentioning the concept of "good debt". In fact, here it is, on his site:
>Myth: Debt is a tool and should be used to help create prosperity.
>Truth: Debt isn’t used by wealthy people nearly as much as we are led to believe.
With the exception of buying your house. But then only if you 20% down and 15-yr mortgage.
And, let's face it, for the demographic he is targeting that's great advice. Most got into their situation due to poor handling of debt.
However, the vast majority of other financial advisers in the world, and economists, agree that with good management debt can be very beneficial. Dave Ramsey is not the Financial God. He has a very simplified, easy-to-follow program designed for a specific set of individuals. And, honestly, the majority of people would do well to follow it to the letter. But that doesn't mean EVERYONE should for EVERY situation.
This is less black and white than you are making it out to be. Taken to the extreme you praise the millionare who is up to his eyeballs in debt and living under a bridge because all of his money is tied up in investments and he's going to die with the biggest fortune possible.
Having tons of money is pointless if you don't eventually spend it on improving your life or the world around you. Obviously blowing all of your cash on frivolity is also bad, but you need to strike a balance or you will end up being Ebenezer Scrooge, a miserable old rich guy with nothing to show for his life but big numbers on a piece of paper somewhere.
I resonate strongly with this position but don't think the media will ever be able to express the nuance well. I explain to people about the difference between borrowing to buy a farm tractor that lets you double the money per acre you can get on your farm, vs borrowing to buy a super elite electric car that only drives you to the same places (and usually at the same speed) as your old gas car did.
One debt increases your annual revenue for as long as you own it, the other increases your annual car expense as long as you own it (decreaing your revenue).
As a regular Ramsey listener, I can tell you he is against ALL debt (except for a reasonable home loan). Basically if you are making some kind of investment, you should save up the cash for it.
You're 100% correct—but also 90% of the people in his audience are squarely in the bad debt category and to them the simplified message of "debt is bad, get out of debt and stay out of debt" is winning andvice, especially with his straightforward plan.
I'd feel better about paying my taxes if they were well-spent, and not patently wasted on wars, cronyism, and the latest political whims. Some of that is to be expected, but the degree of waste in the US system is appalling and seemingly nearly total.
After all, if you take pride in fresh new road surfaces and good schools, you also have to take some responsibility for our foreign policy.
I owe 3.5k this year and I wish I could give that directly to a social program that would do more good with it. Or at least donate it to the Chicago Public School system.
It is frustrating to pay taxes to a in debt state and a in debt country.
If you enjoy paying taxes, here's an offer: Why don't you pay some of mine? The point is, folks who advocate for higher taxes aren't being altruistic, they're advocating for everyone else to be paying more.
I also don't like taxes but I like seeing lepers in the street, driving over holes in the road, having my kids acquire debt to go to school etc even less. Paying taxes is completely selfish.
To the people saying that debt is not so bad, please realize that you get that debt from a private institution that subsequently collects interest. Said institution does not have to work for this interest, it merely has to sign your debt into existence. The monetary system we have now, where money is always created as debt by a group of elites with specials rights is not fair.
I don't mind paying property and local taxes for this reason, but if my Federal taxes are going to go toward building that fucking wall, I will do everything I can to avoid paying them.
Serious question: were you alright in past years with your federal taxes going to the war in Iraq, as an example? Where do you draw your personal line for "this type of activity against foreign nationals is alright, but that type is where I draw the line?"
Anyone can feel free to answer this one. I'm interested in where people are drawing their own lines.
You can't draw your own lines, which is precisely the argument in favor of a small, weak federal government and robust, largely sovereign state governments. The same people glad Trump is in office now were screaming about executive power two years ago, but were thrilled with the huge expansion of federal power with the TSA, etc. It's cyclical and everybody's memory seems to be maxed out at 12-18 months on a good day.
This is true in terms of "where your tax dollars go," but you can certainly draw your own lines in regards to your opinion. The latter is what I'm discussing.
I also don't mind paying a lot of taxes. But I wish I could pay more than the tiny amount I pay to my state, and less than the huge amount I pay to the federal government, so that I could have a louder voice in how the money is being spent. I can't see how we would transition from where we are now to that system, though. I wouldn't want to see state taxes massively raised before massively lowering federal taxes, and I wouldn't want to see federal taxes massively lowered before we have replaced a lot of critical federal programs at the state level. So I've settled on being ok with paying lots of taxes the current way, where a lot gets "wasted" on things I would prefer not to pay for, but a lot also gets spent on things I believe improve my life.
> Paying my taxes is a point of pride for me. It's a repayment for all those years I was poor and the government paid for me to live and go to school.
Spoken like someone who wasn't on the receiving end of bombs, troops, torture, imprisonment, or theft to enrich the already rich - you know, the bulk of government spending.
I pay my taxes in order to avoid being a victim of state violence, but when I do, I say a prayer for the victims of my failure to be strong enough to do the right thing, which is to deprive the state of the means to do evil.
There was a point where financing the government was a patriotic act. People would give other people War Bonds as presents. But now the patriotic thing is to trash talk which ever party is in the administration and wax poetic about governmental corruption. You can't have it both ways. You can't say no to financing your government and scorn corruption. Either you're okay paying for your government, you're okay with someone else paying for your government (to possibly include other governments!), or you're okay with your government paying for itself with printed money. (That last option, seignorage, leads to hyperinflation.)
The government needs better PR frankly, instead of allowing itself to be a punching bag all day. Nobody can even imagine how many things the government and your tax dollars provide.
There's a lot of talk with respect to the US Democrat/Republican split on how Democrats are terrible at highlighting when government helps people (because it seems to cheapen the process or some silly issue.)
I saw an interesting comment recently, from a Republican who wished for Pelosi or some other important Democrat to just say thank you. Thank you for the money, thank you for working to help these people, fund these programs, keep everything running smoothly.
It's an interesting thought. There are plenty of reasons it's not going to happen in a vacuum - if Pelosi did it tomorrow she'd be mauled by both parties. But as part of something larger? It could be incredible. William Proxmire made his career with the Golden Fleece Award, attacking stupid and wasteful spending (sometimes quite inaccurately). I don't know why there's so little effort on the left to clearly, emotionally show the good that gets done.
Imagine if every budget fight involved someone coming forward and saying "I grew up being fed on WIC. I'm a civil engineer now, and WIC helped make that possible. Out of every tax dollar you paid, I got .000002 cents. Do you really want to take that away?"
Growing up, I got free lunches in school, and in college I got the maximum Pell Grant every semester for four years straight.
I thank my lucky stars for those things and am very glad the government did it.
Of course, given the amount I pay in taxes, the government made an absolutely terrific investment. I have returned that value to it many, many times over.
All else being equal, of course I would prefer to pay lower taxes. That's what efficiency means, and the government is not very efficient.
But "Taxes are what we pay for a civilized society." (Oliver Wendell Holmes, Jr.), and I kinda like civilized society.
I was thinking about this recently when I filed my taxes.
Maybe if they provided some kind of itemized receipt? "You paid $x in taxes. This was distributed as $y to infrastructure, $z to education, $w to defense" etc.
My local taxes (county) do this. Whenever you pay property (house, car) taxes, it tells you $x goes to the county schools, $y to roads, and so on. (Usually including something like $0.67 to the county library!) It's really nice...sure, paying tax on my car every year isn't great, but I'm happy to give $150 (or whatever it is) to the public schools.
Your tax dollar don't pay for $y, $z or $w. You pay for the national debt mostly at this point. The government overspends and gets its money either from debt or from over printing. Even if top 10 of fortune 500 paid 100% taxes, it would still not cover spending. Just saying.
There is something off with the charts on the site you refer to (they don't provide the actual numbers in the charts).
Simple calculation:
With $20T of debt, at 3% interest rate (30Y bond), the interest on the debt is adding 600 billion dollars to the deficit per year (and it compounds).
600 billion with respect to the 3.8 billion federal budget is almost 16%.
And the interest rate is so low only because debt rates have been artificially suppressed by central banks using financial tricks such QE, the Fed buying its own's governments' debt, etc.
With interest rates bound to rise sooner or later, we are sitting on a financial time bomb.
Soaking the exceedingly rich doesn't solve the budget deficit, true. Erasing the entire debt would be a slow and expensive process that would spread much higher taxes across most or all earners.
But you don't pay for the national debt, mostly. Recent payments on the national debt are around $420 billion - about 11% of the federal budget. God knows that's not small, but it's far from 'mostly', and 2/3 of the debt is even held inside the US.
Unfortunately, that PR has another name: Propaganda.
Progressives in particular are sensitive to the idea of the government messaging them and tend to worry about the perception. Meanwhile, private interests have no compunction against advertising heavily and constantly to get their message across. It's a huge advantage for industrial incumbents over the government.
There is a much bigger and simpler reason people stopped gifting bonds, interest rates are garbage. War bonds aren't even available right now, but there are still general government bonds and treasury bills.
The interest rate is so low on them that the growth is basically a slap in the face to whoever is receiving it and cash would be better because they could at least use it at the present time. Remember, once you buy a bond like that, the interest rate is locked in so you're stuck with the crap 2% for 27 years on the bond you bought from the government 3 years ago.
People also used to gift corporate bonds (e.g. from railroad or utility companies) and that's a dead practice as well for the same reason.
There's that last option where you would be ok with having no government at all. Although, governments usually do not offer it except maybe in Liechtenstein.
The only people who should be ok with no government are practiced warlords. The rest are naive anarchists who believe in the ability for people to peacefully self-govern or selfish libertarians who think they deserve to keep 100% of what they make regardless of how far society carried them to get their wealth.
I don't think libertarians believe they should keep 100% of their income, in an ancap world a big chunk of their money would go to private competing institutions and charities. In fact some of the biggest donors to charities (and tax payers) tend to be libertarians. Also, let's not kid ourselves, we're all selfish. That being said, not saying an ancap world would be heaven on earth, not that what we have right now is either.
Can't you be OK with contributing to the system and still talk trash about the people working in the system? The system is a separate thing from the people involved in it.
Although this is a topic that needs a book-level dialogue to flesh out (and there are in fact books on the topic), in a nutshell:
The internet performs many of the functions that our species previously required government to do, but does so without the need for a centralized authority claiming a monopoly on the initiation of force, which brings with it inevitable corruption, violence, division, and victimization of the world's poor.
When stacked against the bang-up job that the US Government has done, not only on the landmass over which is claims sovereignty but the rest of the world - especially the continent of Africa - I'm certainly open to solutions other than government.
I'm from upstate NY - I grew up with superfund sites to the North, East, and West.
And yes, I'm glad that the EPA (and DoJ!) have occasionally done the right thing. But I don't think they've done the right thing often enough to suggest that the model they represent is the best humans can do.
I don't think it's a straw man at all. Some people are wonderful at manipulation and organization on the internet. Certain places on 4chan are wonderful when it comes to organizing people.
The causes they take up are mostly morally questionable. If people are going to organize on the internet places like 4chan will lead the way, for whatever that means.
Now turn it around. What is money? Money is someone else's debt. Money is a promise that someone else will go to work for you in the future to pay it back.
I wish more people thought this way. Debt can be be used effectively, but as Uncle Ben said, "With great power comes great responsibility." It seems that too much of America is wooed into a false sense of security by their ability to obtain debt without judging their ability to pay that debt off.
I agree with your sentiment, but it strikes me that there is safety and opportunity in behaving badly when the bulk of your peers are swept away in an orgy of debt fuelled spending.
Ten years ago I bought a small flat in London to live in. I paid a respectable deposit and didn't over-leverage. We were at the end of decade long property boom, there were huge concerns about the level of borrowing and ability to repay, predictions of mass repossessions if the BoE raised rates by even a quarter percent, the BoE would regularly "jaw-bone" the fact that the rate must rise[1].
The bank wanted to lend me 5x the amount I borrowed. I could have bought an entire 3 bedroom house rather than just a 1 bed flat situated in the same property. I borrowed within my bounds, priced the debt relative to an upward BoE rate, played it sensible.
What a missed opportunity! In retrospect I should have taken all the cash the bank wanted to throw at me and bought the whole house. I would have been able to manage the repayments fine, and financially I would be light-years ahead of where I am now.
All because the government will literally burn anyone to keep those vested in the housing market safe (particularly I reference the U.K/NZ/AU, I assume the U.S.A is similar).
Behave badly in droves and the government will never raise that BoE rate. They will burn savers, they will continue to inflate the housing bubble, they will set fire to the hopes of anyone under the age of 30 buying a house to live in. Literally anything to save the retirement nest-egg of a generation of baby-boomers, aided and abetted by a generation of baby-boomer politicians.
Only external factors will bring an end. In the U.K that may be Brexit (as external as that is), in AU that may be Chinese capital controls.
Until those external factors are applied you're fine misbehaving. For me, behaving respectably was a mistake.
[1] The rate today is 0.25%, an all-time historic low. The rate when I bought was 0.5%, at the time an all-time historic low.
> In retrospect I should have taken all the cash the bank wanted to throw at me and bought the whole house.
You made the correct decision with the information you had. In Ireland, people who made the opposite decision are still underwater after a decade. So it could easily have gone the other way.
Just because you got unlucky by being responsible doesn't mean everyone does or will.
I've known people in places where the property market collapsed and its ugly. And I know people think it can't happen in London, but 'it can't happen here' is about as myopic as it gets.
The property market collapsing (locally, not nationally) is only an issue when you want to sell. If you buy a house with an FHA mortgage (3.5% down), you will be underwater for many years no matter what. But it's a 30-year loan, why would you buy a house if you wanted to move in 3 years?
Plenty of people did this in the US (and I assume other countries) during the Great Housing Debacle of the early 2000's, it's called "flipping." The problem is when the music stops, and nobody wants to buy houses, you are stuck with it, and either need to default on the mortgage or suck it up and live there.
My language is a bit loose, of course the BoE is independent and controls the rate.
But the government sets the BoE remit to use the rate to keep inflation within acceptable bounds, and Gordon Brown decided to move from RPI (which includes some measure of mortgage payments) to CPI (which doesn't).
It does seem madness that we would control monetary supply without consideration of inflation in the largest asset group that lose monetary policy impacts (actual house prices, not just mortgage payments), but then I'm no economist so what do I know.
I mostly agree with you, but I think you missed one problem. Suppose you bought the 3 bed house. You'd have big mortgage payments to make every month. It all depends on when you sell the house. Too early and you would be sitting there watching the market increase further. You never really know when the market will turn, and if you left it too late you could be in negative equity with no way to sell the house and trying to make big repayments, perhaps having also lost your job (since these things happen at the same time).
In other words unless you've got a foolproof method of predicting the future, or you love the thrill of huge financial risks, I think you made the right decision to live within your means.
A three-bedroom house means the poster could have rented one or two of the bedrooms out. Tenants are of course their own sort of risk but that's a common strategy for young home-owners looking to reduce their monthly payments.
I'm not castigating the guy because I think the prudence you're advocating for is far more wise than getting oneself into a financial jam, but there are ways to approach a risk like a house payment and reduce it.
Here in AU the Federal Government is considering allowing access to superannuation (compulsory retirement fund paid out of your wage) to first home buyers to help with a deposit. An interesting opinion piece[0] discusses how this might be construed as a ponzi scheme.
Similarly first home buyer grants or stamp duty concessions, they sound appealing to young couples struggling to enter the market but have repeatedly been shown to do nothing but inflate the market further.
When confronted with a golden goose that pumps money into the economy no politician wants to take a long term view of impacts, particularly when it's their generation making easy money at the expense of those who follow.
Indeed, in AU there is also the pressure of negative gearing, which enables a lot of high earners to buy many properties. Even removing negative gearing from properties is a really tough ask to get through politically.
Most Americans are using debt to buy consumer goods. So the question most should ask themselves is, "As a citizen of a first world country, with a good job and a super high standard of living, why is it that I need to consume some of tomorrow's dollars to get myself even more stuff right now?"
I pay everything with my credit card. It automatically gets deducted from my normal account at the beginning of the month. I get a little money for every purchase and the credit card company gets to now my purchasing habits.
Then there's the flip side of using credit cards to get a 1%+ discount on things and paying it off in full. If you have the cash and discipline, debt can be used for very low risk benefit.
And CC companies bank on the fact that if even a small percentage of people aren't able to pay it off in full they'll get their "rewards" back in full within a single period of interest.
They also bank of the fact that you will use your plastic for more frivolous purchases since it's so convenient. Plus you think you're getting some cash back reward later, so you don't feel so bad about it. If you had to pay cash, you might not be wasting as much money.
Yep, they make money either way. However, it only takes 1 person carrying a balance at 20% to make up for the rewards of 20 people who spend and pay off.
Debt is new currency. If everyone is buying their cars with credit, soon nobody can afford to buy with cash. Around here even if you have decent wage right now, but not a stable job, you can't get credit to buy a house, while someone with a low pay but stable job can, you're effectively poorer than them.
You seem to appraise the stability of a job as having zero (or at least very low) value. This might be justified if you are certain that you can get a new job in a short term if you lose the current one. However, from the banks' viewpoint the probability of you getting a new job soon enough to not miss any payments may be appraised much lower, possibly being influenced by other economic sectors where getting a new job takes much longer. Banks have interest and dividend payments to make themselves, so they obviously place a high value on stability. So yes, someone with a lower paying but more stable job may be more wealthy than someone with a higher paying but more unstable job.
Appraising the current net value of a job is always a bit shaky though, because there are so many variables.
It used to be common to view personal debt this way.
I noticed a big change in the way debt was perceived by during the late '80s. Since then, debt is seen as normal. I'm pretty sure the finance industry has pushed 'Fractional reserve banking' to the limit to allow unchecked borrowing for land and housing. [0]
It's the way that consumer culture can grow, because you use your line of credit to buy a second or third car, nicer car, jet ski, boat, canoe, etc. Then when you have all of this stuff you have to buy a bigger property just so that you have space to store it. So that means selling your existing property to someone else to repeat the cycle.
It is certainly an efficient way to keep money moving.
A bank's reserves are the funds it holds in its account in the central bank. Some countries require that a certain proportion of the bank's assets are held in reserve in order to be sure it can easily meet its short term liabilities (i.e. to safeguard liquidity). In that regard, the system is a little like fractional reserve banking. But the UK and Canada don't have reserve requirements at all. In general, the main constraint on a bank's lending is its capital. Which is why you read about "core tier 1 capital ratios" when a failing bank makes headlines.
"A bank's reserves are the funds it holds in its account in the central bank."
Are those reserves (capital) fluid? From the tier-1 you refer I get the impression these are real physical assets and in flux. Interesting. How do the UK banks handle market runs? (I must read more about the banking system) In Aus major banks are government backed with minimal competition.
It surprises me all the time to see what you can do with a CC in America. Here in Europe it's also very common to have a direct debit card. You don't have a monthly bill, but the amount you spend is directly deducted from your account. Lots of people prefer that.
The best option in the US is to use a credit card as if it were a debit card, and pay your balance off every month. This way, you get to take advantage of the better fraud protections, cash-back rewards, and balance-smoothing benefits of the credit card, without paying any intetest. And it improves your credit score.
Unless you have no financial discipline, there's no reason to use debit over credit.
As coming from a country where debit cards are widespread (France), and living in one where they barely existed until recently (Japan), and having had my (japanese) debit card fraudulently used (still a mystery how ; not stolen, barely even used at all ; last use 8 months prior), I now know that credit cards are better in that case: if you notice the fraudulent use early enough, it's not going to hit your account, while I'm now stuck waiting for a reimbursment that will hopefully happen 3 months after reporting the event.
Just for that, I now prefer a CC, not using the "Credit" part of it. Edit: well, technically, I'm using it, but only as a buffer.
But it's always awkward to be asked "single payment?" for ridiculous amounts like $20. Huh, yeah, why? are people really paying such amounts in multiple installments?
I just use my credit card as a debit card. In the US, consumers have better financial protections against fraudulent charges with credit cards than debit cards.
I view debt as gambling against future prosperity. It's a faustian deal you make with yourself to steal your own future earnings to use today. What a bittersweet deal (most of the time)
As a general rule, people in the future are richer than people in the past - both individually and at the society level. It is gambling, but history suggests that it generally works out.
Timescales are a bit off for that rule though. People are generally better off in a few years from now, unless they've been paying that extra prosperity to as monthly interest on their debt.
Risk is one of the things that debt can represent, sometimes, but there can be debt that doesn't involve any risk, and there are risks that don't involve debt.
What's risky about using a credit card to buy a kayak?
And how does investing money you already have in small cap equities represent a debt?
I think for the vast majority of individuals just trying to make good personal finance decisions, "don't take on debt" is (on average) great advice.
(I don't really agree with the simplification of debt = risk. Despite that...)
> What's risky about using a credit card to buy a kayak?
If you unexpectedly lose your job or are otherwise unable to pay off the card on the schedule you expected, you'll incur significant interest on the debt and end up having to pay far more than you originally planned. Compared with saving up money and paying in cash, there are clearly additional risks incurred when using the card.
(If you had the money to pay off the card already and are just using the CC as a convenient method of payment, the risk is obviously far lower.)
As with risks, so with debts. There are large ones and small ones. Paying down a balance on a credit card every month is pretty low risk, but not as low as paying with a debit card in the first place.
Also, a credit card you're paying down monthly isn't really 'debt', isn't it usually something you do for the air miles or cashback?
>Paying down a balance on a credit card every month is pretty low risk, but not as low as paying with a debit card in the first place.
Not when you account for the stolen card scenario. When someone steals your debit card and racks up charges, it locks up real money (your bank account balance) that you can't use until it's resolved. A stolen credit card just locks up a credit-line.
However, even if you ignore that, I'm still missing what risk you see with a credit card that results in it being higher risk than a debit card. What is the risk I'm missing?
>Also, a credit card you're paying down monthly isn't really 'debt', isn't it usually something you do for the air miles or cashback?
It's very short term debt. I do it for two reasons, air miles/cashback, and for better protection when things go south. In addition to the stolen card scenario above, some credit cards (e.g. an amex I have) will provide additional protection for things like rental cars (additional insurance) or even stolen goods (refunds for electronics stolen from your vehicle).
To some, debt is a hit to one's freedom, dignity, and privacy.
Most debt requires you to give a lot of personal information, tell a bank what you are buying, and then stick to a fairly arbitrary payment plan with various penlties for non-compliance.
So it's perfectly sensible to minimize your debt for non-financial reasons.
buying a house, car, going to school, university, having a baby also requires you to give a lot of personal information, it does not mean its a reason not to use those things...
Yes. Some have even made the argument that this makes voter identification requirements racist (due to the higher home birth participation of African Americans).
This would of course be one of many factors that would make voter identification requirements racially biased; far lower rates of possessing compliant ID would be the more important factor.
I think people don't consciously think in these terms. I once had debt in the form of student loans and a car loan. Becoming debt free was a great relief. It removed a ton of stress and provided me with freedom. The emotional well being from being debt free is not something that can easily be quantified in monetary terms. For the average person, I see it as "don't take on debt" being akin to "don't willingly get into a situation where you may have to worry".
>Going into debt to vacation in the Caribbean (which is what he did) is not the same as using it to say start a business or get an education.
They differ only if the metric you choose to measure against the debt is "money". But some of us do things for other than money; happiness comes to mind.
You're very right. If you need a vacation for mental health purposes (doesn't even have to be clinical) that's still an investment. But if it's your typical entertainment oriented vacation then that's a poor use of debt.
Bordain is being very specific. This is about personal debt and being risk adverse, "I am fanatical about not owing anybody any money. I hate it. I don’t want to carry a balance, ever." The whole article is explaining his prior life as working chef.
Notice he has a lone but tries to avoid risky debt?
I sometimes wonder if the attitude of take on risks is somewhat of a survivorship bias. I'd assume that the expected return of the safe choice is always higher than that of risky ones.
Now you could make a ton of money by taking risk, but its kind of like playing the lotto. Few winners lots of losers.
Debt can reduce risk. Many corporations use leverage up a project, say 90%, so they only need to put in the 10%. If something goes wrong, they lose the 10% and they walk.
This is fantastic advice for 95% of people. If you one of the few that can manage debt responsibly, however, you'd be missing out on the opportunity for leverage. In many cases a person can effectively trade their good credit for additional returns.
Of course, you need to fully understand the risk/return profile of any leveraged investment you make AND be careful not to be overleveraged at any point. It's a fine line to walk, but it can be a valuable part of your investment portfolio.
I think the important thing to consider is what you are taking on debt for - are you using it for investment in something or for an expense? A house or an education is an investment - it can be a good or bad one, of course, but the idea of going into debt to obtain either of those should not be dismissed out of hand. Both can provide a return on those investments greater than the interest cost.
However, if you are taking on debt for an expense (a vacation, a new car when you have a working one already, a new toy), then you are gaining nothing in return for the interest. You could easily wait until you have the money saved up, since those expenses have no extra return for purchasing early.
The worst debt, of course, is when you are taking it on because you simply have more expenses than you do income. This is often the source of credit card debt. If you are growing in debt but not growing in investments, you need to take a hard look at your lifestyle.
One caveat to this kind of thinking is that money is fungible.
One can easily pay for a vacation or years of eating at nice restaurants every day all in cash, and also go into debt for an education.
Also, one individual taking out an auto loan and a loan from Sallie Mae isn't 1 good loan and 1 bad loan. You could've foregone the high-interest loan on the big depreciating asset and used the savings to fund the education instead of the loan from Sallie Mae. In that scenario both loans were probably a bad idea, regardless of the return the education nets you.
I think another key metric beyond interest rate and rate of return, is degree of necessity. That's harder to measure though.
IMO, student debt the way it is structured in the US cannot be classified as an investment because it cannot be discharged and has no collateral. You cannot get a return on student debt. You can get a return on an education, but the debt is much more like a cc then an investment, especially if any of the student debt is used to pay living expenses.
Debt conversations always have these weird grandpa rules of thumb and words of wisdom, as you can see in the other comments.
The proper use of debt is to match the debt with the asset. If you are buying a house, a 25-year mortgage matches the value of the house. If you are buying a car, a 5-year loan matches the value of the car. If you are buying a sandwich with a credit card, well... you should pay off your credit card at the end of the month because that sandwich is long gone.
> If you are buying a house, a 25-year mortgage matches the value of the house
The exchange price of the house does not have any intrinsic value, while generally speaking the cash money you owe to some external entity like a bank tends to keep its value in most of the cases (the Venezuela- and Zimbabwe-like cases are few and far between). In other words, you're betting that a real-estate crash won't happen before you end up paying your debt.
You have that same risk if you paid it for the house lumpsum at the beginning. You bought it at a set price and its value fluctuates.
You still have the option to continue to pay the mortgage payments and pay off the loan, regardless of the current value of the house.
I'm not in US, but I believe they can reduce their own risk by using debt to buy a house. They can put, say 10%, in equity. If the real estate market crashes, the lose that 10% and walk away, leaving the bank with the house.
No, matching debt to assets is proper finance theory and practice.
I was referring to "don't use any debt" and "debt is manifestation of risk" and "With great power comes great responsibility" and "use debt for investments, not expenses".
And for banks that borrow short and lend long? They're just ignorant of "proper finance theory and practice"? Or have they properly understood that the risks involved in credit transactions have a bit more nuance than your rule allows for?
Banks are definitely measured on Asset Liability Management by policy and regulations. Deviations from being matched would be an active choice, while being matched would be the default/starting point.
The general rule, really, is more like borrow only for appreciating assets (often real estate, financing a new business) and not for consumables or depreciating assets.
But both your idea and mine are still rules of thumb, notwithstanding how much you wish to elevate yours to a different status.
> The general rule, really, is more like borrow only for appreciating assets (often real estate, financing a new business) and not for consumables or depreciating assets.
Note the gotcha: if enough people borrow money and buy something because they think it will appreciate, it will. In other words, according to your rule, speculation can make itself appear worthwhile.
If you pull out a corporate finance textbook, matching assets to liabilities will be covered. Matching cash flows will be covered. That is why I am elevating beyond being a rule of thumb.
Using debt for appreciating assets vs consumables will not be mentioned. As an example, a car doesn't appreciate, but a loan for it is fine.
It seems to me the people struggling with their finances don't have a problem matching debt to assets, it's they have a problem with too much house or too much car.
Using the example of the car, you should be able to pay off the car after the 5-years. If you can't, then it's too much car.
Oddly, debt is supposed to help with seeing that. It breaks down the lump sum payment into monthly payments where you can compare to your monthly income.
It's bizarre how much debt advice doesn't differentiate secured from unsecured. The two have commonalities on simple things like interest calculations, but they're very different in terms of risk and I get suspicious of advice that doesn't acknowledge that.
The problem is that debt starts modifying your behavior.
If you are in debt you are more likely to tolerate conditions you don't enjoy, e.g: if you live paycheck to paycheck, being happy at your job is not your top priority.
"Once I did that risky thing, leaving the only profession I knew to become a professional writer and TV guy, I was, and continue to be, very careful about the decisions I make every day."
> Only way I'll get to the debt free nirvana is if I get rich somehow. It's not a real choice. So the entire premise of the article is pretty weak.
No, that certainly is not the case. Slow and steady saving and investing is the way to become wealthy. Check out www.reddit.com/r/personalfinance or www.mrmoneymustache.com as examples of this.
I've seen the Mustache site before, but let's be honest here: this only works if you live a frugal life style.
It might work if you are alone with no attachments or your SO has the same views, but not for anyone else.
I'm trying to become less attached to things and have gone a long way, but telling your wife and kid to not want to eat out, for instance, is almost impossible...
Bourdain is an OG. I've always admired his candor and ability to reflect on the things most important in life (and he knows it first-hand, having traveled nearly every where) -- time, lack of stress, and the enjoyment of good food with good people. Cheers!
If your return on capital is higher than the interest rate, you should take on debt. If it's not (and for most it's not), then you shouldn't. Pretty simple.
Anyhow, the article is an interesting anecdote about Bourdains life, but has little to do with money. He makes money from TV and books, can live comfortably because he makes quite a bit, but he's no financial savant.
Indeed. That's why Apple takes on debt and does bonds to pay dividends, buy back stock and other stuff they need to pay big money for. With their cash reserve money is dirty cheap and they can actually make more money cause people will rebuy their debt like hot cakes.
Off topic, but why did the creator of this site make the top bar move when scrolling? That makes it 100% impossible to read for people who use the top of the screen as a line to read along. Also, is their a chrome extension to cancel that functionality?
> Nobody likes paying high taxes, but I don’t mind.
It's actually amazing how little most Americans pay in taxes yet we complain. This year my effective tax rate was ~8%. Of course this is by using every legal tax shelter available.
Considering what I get from the Federal government here in the US, I think 8% is actually fair. If it spent more of my money doing thing like taking care of home and quit with the empire building I'd be happy to pay more.
8%? You either live very close to (or under) the poverty line or are fabulously wealthy. I'm assuming that you're rich since you mentioned tax shelters.
TurboTax put my effective tax rate this year at 26%.
Nope. 2 income, low 6 figures. There are pretty significant shelters for us middle class folks. $36k available in 401k contributions alone.another $6.5 k for HSA. $5k for childcare spending along with credits and deductions for the same thing. The key is to have a cost of living where u can afford to take advantage of them all.
I've been to a couple of his tour stops, where he gives talks about various topics (usually food and travel and his TV shows are the main things discussed). If you find Bourdain interesting, you'll probably find his talks quite entertaining.
Anyways, at one of his shows he straight up said that each of his stops pays for a year of private schooling in NYC for one of his kids. Thought it was an interesting way of looking at things.
You obviously didn't read the article. Bourdain did not reach the magical 'no-debt' world of wonder until after he got famous.
If anything it's a fake-cautionary tale. "Don't do what I did kids, even though I'm rich and did more blow and had way more fun than you'll ever have in your whole life!"
Please don't insinuate that someone hasn't read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that."
I didn't read anywhere in there where he says don't do what he did.
He lived his life the way he wanted to, there were some rough times. Now he has a family, different priorities and resources, so is taking those into account but still generally living the same way.
My tl;dr would be "I was always in debt when I was young. Now I have a bit of money and prioritize those I care about, but after that's funded I'd rather have great experiences than a larger bank account."
As a long-time fan of his, his early life IMO (I've read and loved Kitchen Confidential) was shortsighted hedonism that came to a crashing halt when he became famous.
He has since settled for dating/marrying beautiful women, noticing that chain smoking would probably kill him and started doing Krav Maga instead, and becoming smart about money.
> I didn’t put anything aside, ever. Money came in, money went out. I was always a paycheck behind, at least. I usually owed my chef my paycheck: again, cocaine. Like I said, until I was 44, I never even had a savings account.
Anyone who has ever spent any of their money on class 'A' drugs is not in any position to dispense any type of wise financial advice.
I mean... there's even a note to that effect at the top of the article. Bourdain says like five times that he makes decisions for convenience and security over efficiency.
This isn't advice on how to maximize your wealth, it's a personal account of how he lived and how debt and wealth influence him on an emotional level.
How refreshing.
I agree with him.
Paying my taxes is a point of pride for me. It's a repayment for all those years I was poor and the government paid for me to live and go to school.