So I really pay no income tax?

The number is not wrong.

What's wrong is when people use this ONE tax (out of dozens that we ALL pay) to create the sweeping generalization that "the poor don't pay taxes!!!!"

And you know damn well who does this kind of shit (see News, Fox).

This puts it ALL in perspective and makes the 47% crap completely irrelevent:

 

Let's take that same $1,000 refund . . .

If you had increased your 401(k) by that amount, your tax bill would have been about $200 less, and you'd have $1,300 or so more in your 401(k) (based on how the market did this year). That's a $500 improvement over letting the government have it.

If you had invested in, say, Apple Computer all this time . . . . well, I think you might have a little more than an extra $6 to show for your trouble.

People are ultimately responsible for their own financial success/failure. If "I don't have the discpline" to do the right thing, then you do not have the discipline to be financially successful. Pity.

I wrote the government a check for $135 the other day. Meanwhile, I'm putting $900 a month in my 401(k). Saves me more than $2,000 a year in taxes, and since I don't see that $900/month, I won't blow through it.

 

I don't pay federal income tax, but I pay sales tax, FICA and property tax (at least indirectly since I rent). Then I pay franchise fees for cable, registration fees for my car (a tax in many states now, but labeled as a fee increase) and many other fees.

There were a few commentors on stories regarding a school tax increase in my district who said renters with kids were freeloading on the system because they didn't pay property tax, except those costs are just hidden in the rent. I just don't get how our society can exist with idiots who can't think things through.

 

If your 401(k) has lost money over the past year, what the heck were you investing in? Greek government bonds?

 

Thanks to the marvel of dollar-cost averaging, it's really difficult for a 401(k) to lose money over any extended period (unless the investments were off-the-charts crazy). When the market dips, you are pouring money into cheap units, and that allows your balance sheet to break even long before the market does.

 

Agreed. I was just saying that, even if you're financially illiterate, it would be difficult to have lost money in the market during the past year.

 

Damn, I know I shouldn't have bought those Greek government bonds from that Nigerian prince who e-mailed me.

 

It's really circular insanity. How many of these people will use the big refund to pay down big credit card debts? Debts that didn't have to be so big --- thanks to month after month of accrued interest --- had they used that money throughout the year to pay it off instead of waiting until the following spring.

 

Guess I'm just tired of the "I don't have the discipline . . . " excuse.

It doesn't even take discipline. Takes a few mouse clicks to send the money to a 401(k) or a savings account or have it invested somewhere regularly. Then you don't see the money, so you can't throw it away.

 

As opposed to the guys running Morgan Stanley? Bear Stearns? The Fed?

 

The difference is, they get bonuses for failing.

The average citizen gets foreclosure and bankruptcy.

 

The big number here is percentage of income. Eighteen percent of $8,000 income is a helluva lot more than 19% of a $1-million income. You're going to feel that percent plenty if you are paying 16% of $35,000 or 17% of $56,000. This was said best by Warren Buffett on Nightline with Ted Koppel years ago: "My secretary pays a greater percentage of her income to taxes than I do and she makes FAR less."