The common rejoinder is “but they are paying FICA and HI taxes!”. At least for FICA, the benefits are based on the earnings on which taxes are paid, and the SS formula strongly favors the lower earners. They get a benefit based on their taxable earnings and it is higher (as a % of pay) than for higher earners.

Amazing! and think, all i have to do is personally live below my means (aka expenses under $12k/year or less to give $8k margin) and persuade my family to do the same.

Sounds like a nice goal to me
Just takes small moves for everyone, then a giant “hell with it” leap.
My pre-first step, reducing my expenses as low as i needs/few high quality wants can.
My pre-second step, having a decent emergency fund at all times.

My first step, eliminating 6.8% fix rated student loans.
My second step, paying off 2.9% car loan.
My third step, working/saving/investing/sacrificing 4 or less years of my life to buy a $100k + tax house with cash

My forth step, working/saving/investing/sacrificing 6 or less years of my life for that Savings of $200k+ to be invested in tax freed dividends or long term capital gains.

My fifth step, enjoy early retirment extreme for the rest of my life, occasionally patenting some ideas and writing a few books/apps online and offline from my hobbies.

Live where-ever in the universe i wish too, and my fullest priorities will be to spend TIME with family, friends, and self; and not money with loss of time with enslavement to someone else.

And yes your 30 Terabyte computer machine can be labeled as a Datafarm, and leased out to China users at .03cents/kb better learn how to increase that bandwidth!

Meanwhile you say a sales tax would be better. And how is that Jacob? When you’ll just buy your stuff second hand or on the black market and avoid paying your share of the services the rest of us subsidize for you?

VAT? A VAT is nothing but a very high sales tax. Another regressive tax that would ride on the people who already pay enough.

Just did another one – 120k AGI, Schedule A totals $46k, taxable income of $68k – Federal tax is $42. FORTY-TWO DOLLARS. (For George – state tax is $3,000, Real estate/personal property taxes are another $3,000)

Total income tax rate based on AGI is about 2.5%.

I wouldn’t say they paid NO tax, rather they paid no FEDERAL tax. Surely they have property taxes (even if paid indirectly through rent) and a state sales or income tax…

1) Their taxable income was less than $68k for a married couple, thus their dividends (about 50k) were taxes at 0%.

2) The rest was in muni bonds, which of course are tax-free.

Not even the dreaded AMT took a bite!

“To understand Danish economy, you should not think”

should have been

“To understand Danish economy, you should think”

Private taxes: Instead of paying for insurances and private health care and private education and pensions and road tolls, you pay taxes. In Denmark, the public sector is streamlined and efficient and very low in corruption (and, admittedly, small), so services are much better per $ (or Kr) than in the US, for instance in health services – indeed, they are better than comparable private services, the downside being lack of (unnecessary) frills. Danish low and average incomes are quite high, so after taxes and bills, Danes have more money left in their hands than Americans, despite a lower BNP.

Business taxes: Denmark is one of the best countries for business and innovation, with not only some of the most simple and stream-lined business laws, but also low taxes, only 25%. The high levels of education available to the general public and a protestant work ethic make Danes attractive skilled workers, which despite tax-boosted incomes, is why big companies like Google have regional headquarters in Denmark.

Flexicurity: To understand Danish economy, you should not think about dynamic flows of money, not the static sort of money that you save up and hide under your mattress. Danes earn high wages (except at the top), from which they pay high taxes, which pays for services that they otherwise would be paying for in private. Employers can fire workers easily but unemployed are helped by the government not only by high levels of social security but also retraining ann also to find new work. There is thus not only a rapid flow of money but also a rapid and flexible flow of workers. This explains the high levels of social security; it primarily is for the benefit of business and people’s careers, and thus for the economy and well-being of Danish society – and not to pay the sofa-lovers of which there are only very few (2-3%)..

All of this works well in Denmark but would fail in the US because you need workers, employers, and governments to work cooperatively to mutual benefit, which is far from the case in the US where inner tensions are enormous, and where corruption and bad-will exists in all three units (workers, employers, government). You also need skilled workers, an open and flexible business culture, and an adaptive and efficient government; none of these are sufficiently available in US either.

However, the Danish system might work quite well in certain US states.

I appreciated your comments on SS. I, as well, am not ready to embrace the collapse of the United States, and I think SS in some form or another as a benefit will be here. In spite of the gloom and doom merchants, there will be enough red blooded patriots in the country to keep the programs set up for us alive and running. The alternative is just too unacceptable. Yes, these programs will change, and I am not living in a fantasy world.
Although we may be in for some rough(er) times ahead, I feel we the people will eventually prevail.

After accumulating about 15-20X your annual salary in capital, it doesn’t pay to work anymore based on the risk free rate.

Say I earn $100,000/yr… Once you get $2mil, you earn $80,000/yr in interest income doing nothing based on a 4% RF. The ratio goes lower the more you make.

I am finding the less I live on, the less I need to earn and this year I hope it means I can get some savings…. This worries me though as I will need to pay taxes on svaings and I guess I need to start worrying a little more there :s