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No New Taxes Before Pension Reform Dumbass: Government Is Waste

Wages And Pensions Public vs. Private
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In my fiscally irresponsible state of California, Governor Jerry Brown (D) is proposing raising taxes on people making over $250,000 a year.  According to the SF Chronicle, 65% of those polled believe this is a great idea.  Well No Duh useless poll and uninsightful newspaper.  Most people or households don’t make more than $250,000 a year so of course they’d be for raising taxes on those income earners!

In fact, less than 5% of the population makes more than $250,000 a year, so why don’t 95%+ believe this is a great idea?  The reason is because Jerry Brown has also proposed raising the sales tax by another 0.5%!  Uh oh, suddenly since everybody has to pay for an increased sales tax, not everybody is for it!



Hey, what’s a 10.5% sales tax rate from the 10% now?  At least you have a choice in paying taxes, whereas if you are making above a certain income level, you don’t.  Let’s just raise sales taxes to 20% since rich people have a lot of money and buy way more things they don’t need anyway!

WHY ISN’T THERE PENSION REFORM?

I’m perplexed why the California government wants to raise taxes on all its citizens, but isn’t willing to reform their own pensions?  Is this not a double standard?  If the government really wants to help the schools, public transit, roads, and other state infrastructure, shouldn’t they reform one of the biggest fiscal burden in the State?

All the State has to do is lengthen the retirement age or increase the age at which someone can receive a pension.  You can retire at 50 if you want, but you’ll still have to wait 15 years until 65 to collect your pension, for example.  Pretty easy stuff.  The private sector doesn’t even have a pension, just a woefully inadequate 401K plan which one can only contribute $17,000 of their own money a year starting in 2012.  I doubt many private sector employees under 40 are expecting to receive their Social Security retirement benefits either.  Contrast that with tens of thousands of dollars of pension income for life, and it’s clear the dichotomy is huge.

Oh crap, I realize why there’s no pension reform.  Those making the laws are state government employees with pensions!  Why on earth would they be willing to sacrifice their own money for the good of the country, when they’ve sworn an oath to do what’s right for the State?  Silly me.

TIME TO UNDERSTAND THE NICE BUCKS



The average California state and local government employee makes $68,500 according to the 2008 US Census Data, while their average pension is $45,700.  Meanwhile, the average private sector employee wage is $46,500 vs. an average Social Security paycheck of only $15,000 a year with no pension.  The pension is literally triple the benefits received by the private sector employee!

Furthermore, the typical government employee works from 25-55 years old and then retires for 30 years while the private sector employee works from 25-65 years old and retires for 20 years.

There are more than 9,000 beneficiaries of CalPERS, the largest state retirement plan, who receive more than $100,000 a year.  That’s right, $100,000 a year+ for the rest of your life at a cost of $1 Billion+ dollars annually for this organization alone, and there are many more!

In other words, a State employee not only makes more while working, gets more while retired, and works for less amount of time!  Hook a brother up!



NOW YOU KNOW

Since everybody likes to spend other people’s money to fix the system and not their own, now you know why it is wrong to give people the power to raise taxes on others without paying more taxes themselves.

If you are a high income earner, usually defined by the government of $200,000 and above, you will always be screwed, even in a democracy thanks to mathematics.  You will be in the minority by nature due to your income, and everybody will want to get their hands on your money by voting to redistribute your wealth.

You must never, ever disclose how much money you make as a result.  In fact, if you can defer as much money as you can while living in a high income tax state or country, and receive distributions after you move, the better!  It’s important to pretend you are poor so nobody comes after you.  If the very government isn’t willing to make some sacrifices to help balance the budget, why should you?

Tax Savings Recommendation



Start A Business: A business is one of the best ways to shield your income from more taxes. You can either incorporate as an LLC, S-Corp, or simply be a Sole Proprietor (no incorporating necessary, just be a consultant and file a schedule C). Every business person can start a Self-Employed 401k where you can contribute up to $54,000 ($18,000 from you and ~20% of operating profits). All your business-related expenses are tax deductible as well. Simply launch your own website like this one in under 30 minutes to legitimize your business. Here’s my step-by-step guide to starting your own website.

Start a simple business to pay less taxes and contribute more to pre-tax retirement accounts

Start a simple business to pay less taxes and contribute more to pre-tax retirement accounts. Instead of paying taxes on $100,000 in income, you’re only paying taxes on $12,000 for maybe a $2,000 tax bill, or 2% effective tax rate.

Updated for 2021 and beyond. 

Photo: Peterhof Palace, St. Petersburg, Russia, FS, 2014.



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