[manaboutown]

"In 2021, taxpayers filed 153.6 million tax returns, reported earning more than $14.7 trillion in adjusted gross income (AGI), and paid nearly $2.2 trillion in individual income taxes.
The average income tax rate in 2021 was 14.9 percent. The top 1 percent of taxpayers paid a 25.9 percent average rate, nearly eight times higher than the 3.3 percent average rate paid by the bottom half of taxpayers.
The top 1 percent’s income share rose from 22.2 percent in 2020 to 26.3 percent in 2021 and its share of federal income taxes paid rose from 42.3 percent to 45.8 percent.
The top 50 percent of all taxpayers paid 97.7 percent of all federal individual income taxes, while the bottom 50 percent paid the remaining 2.3 percent.
The 2021 figures include pandemic-related tax items from the American Rescue Plan Act (ARPA), such as the non-refundable part of the third round of Recovery Rebates and the expanded child tax credit (CTC) and earned income tax credit (EITC).
Capital gains realizations exceeded $2 trillion to reach a 40-year high, driving income growth and taxes paid for high-income groups."

From: Who Pays Federal Income Taxes? Latest Federal Income Tax Data

[Pugchief]

Originally Posted by Stu from NYC

Many people think that xxxxxx.
They ignore that xxxxxx.

Right there is the problem, and it's not just on this topic. Ignorance and media gaslighting are hard to fix.

Originally Posted by Stu from NYC

The fact that the govt manages to xxxxxxx inefficiently does not seem to matter.

That's also pretty universal, on every topic, but unfortunately, it really does matter.

[dewilson58]

Originally Posted by rustyp

Here is one to ponder - the best days on the market happens within 15 days off the worst days. Want to play poker ?

Looking back, can not find a time when the market has not come back from a dip.

[bopat]

Best time for Roth conversions, right now.

[CoachKandSportsguy]

Originally Posted by bopat

Best time for Roth conversions, right now.

Not sure I agree with that statement.

The amount of taxes paid on any conversion is dependent upon your incremental tax bracket. So whether the market is up or down doesn't change that incremental tax bracket.

The potential for tax free social security in the future means than the current incremental tax bracket will start lower for any Roth conversions, so waiting for any changes in the current tax rates will help make the conversion cheaper.

The incremental tax rate determines the payback period, or the time to recoup the taxes paid to get back to same level of wealth as prior to the conversion. The required minimum IRA balance for anyone / everyone is their spending lifestyle requirements. So everyone's individual situation tax and IRA balance should determine the best time to make any conversions.

Finally, the assumption that the markets always go up LONG TERM appears historically true. However, there's not any guarantee, and in retirement or prior to retirement, with an average life expectancy is 78, or 11 years, there is no longer a long term recovery period. There is no guarantee that the market won't continue down, there is no guarantee that after going down, the market will return to anything close to growth of the recent years. And there is no guarantee that any medical procedures will be covered with insurance, and so IRA withdrawals to cover can currently be made tax free or a low tax rate.

Likewise, there is no guarantee that you will be paying taxes on your IRA distributions. My mom's IRA distributions were all tax free for the last 3 years, and would continue to be if she had more, at age 98. Likewise there is no guarantee that Roth IRA distributions will continue to be tax free. What the Congress can give, the Congress can take away. . Congress will more likely be revoke ROTH tax free status if the ROTH becomes a status symbols of the rich, and there is a huge need to more tax dollars, because the treasury can't finance the spending through treasury bonds. .

The only reason that statements like this are being made is that the percentage of the total IRA conversion can be higher, which may or may not be the best balanced investment approach to retirement financial planning. Diversification in income streams is also a valid retirement approach.

good luck to us retirees.

[dewilson58]

Originally Posted by CoachKandSportsguy

Not sure I agree with that statement.

Finally, the assumption that the markets always go up LONG TERM appears historically true. However, there's not any guarantee, and in retirement or prior to retirement, with an average life expectancy is 78, or 11 years, there is no longer a long term recovery period.

Not a Roth conversion fan, so I agree with your "Not sure I agree".

But, FYI, once you reach 65.......life expectancy is ~17 to 20 years.

[Pballer]

Originally Posted by bopat

Best time for Roth conversions, right now.

Roth conversions don't make sense. Didn't you hear that in the future nobody who earns less than $150,000/year will have to pay income taxes anymore.

[Stu from NYC]

Originally Posted by dewilson58

Looking back, can not find a time when the market has not come back from a dip.

Agreed, silly to see all the people who are already panicking

[CoachKandSportsguy]

Originally Posted by dewilson58

Not a Roth conversion fan, so I agree with your "Not sure I agree".

But, FYI, once you reach 65.......life expectancy is ~17 to 20 years.

whew! If I make 85, I will be very happy. Most in my family make 90, if accompanied with good health care.

Diversification of income streams is a good idea, but under certain conditions, a ROTH is not much different than a regular taxable account, depending upon the investments made/held/traded. At times, a ROTH may be inferior to a standard taxable accounts, due to the inability of a ROTH to write off losses, as they do happen from time to time.

There is no free lunch with investing. You pay the entrance fee and hope that your positive expectancy comes true. And when selling at the top and buying at the bottom, the act is a counter intuitive action for many reasons, due to human brain's evolution over thousands of years of fear over happiness for avoidance of risk for survival.

good luck out there, we need it.

[jimjamuser]

Originally Posted by Pballer

If only something was going to be done about the government budget deficits. Congress is passing budget resolutions that cut taxes by trillions more than they plan on cutting spending. This will lead to multi-trillion dollar deficits in the future. Nobody knows how much DOGE is actually cutting spending; they are not providing transparency to independently verify the amount that they say they are reducing spending; they have already been found to have made billions of dollars of errors in stating spending reductions. If you are interested in reducing budget deficits, firing thousands of IRS employees is the dumbest thing you could do. This will cost this country hundreds of billions of dollars in lost revenue each year because wealthy individuals and businesses that push the tax avoidance envelope will no longer be audited. Who is more likely to be audited - it is not Joe Middle Class whose sole sources of income is documented through W2s and 1099s. In the end, DOGE could quite possibly cost more than it is saving.

The tariff plan is going to reduce economic growth throughout the world and increase prices here. The way the tariff rates were calculated is just plain bonkers. Only 10% of our economy is now manufacturing jobs - service jobs pay better than manufacturing jobs on average; it is foolish to think that we can return to a 1950s or early 1900s economy. Maybe the plan is to have a national sales tax; since Congress will never go for that, taxing middle class Americans hundreds of billions of dollars in tariffs is the next best thing; this will help pay for the tax cut plan that is skewed to the wealthy. The markets are acting rationally by plunging - the tariffs will cause reduced economic growth throughout the world and higher inflation here.

Getting rid of IRS agents allows the super rich to get richer. The many tariffs weakens America. And it FORCES corporations and other Counties to come "hat in hand" to BEG for special tariff reductions.

[rustyp]

Originally Posted by dewilson58

Looking back, can not find a time when the market has not come back from a dip.

A very true statement.

"The single best benchmark for all market analysis is the years from 1929 to 1954. This is the period when the Dow Jones Industrial Average peaked at 381.10 in 1929 and fell to the astoundingly low level of 41.20, a decrease of 89.19% in a period less than three years. 1954 was the year when the Dow Jones Industrial Average finally went above the 381.10 level and never looked back."

Proof !

[manaboutown]

Just picked up a new book, "Buffett & Munger Unscripted" written by Alex W. Morris. The writer collected investing wisdom from an archive comprising years of BRK shareholder meetings via gathering statements and quips from the two men and organized them into chapters. Although I have only read a few pages I am finding it beneficial and thought provoking. As I have, some may find it an especially rewarding and even soothing read during the tumultuous times we are currently experiencing.

[ithos]

The magnitude of moves across equities, rates, and many commodities is resulting in hedge funds being hit with some of their largest margin calls since the Covid pandemic.
Futures, Global Markets Tumble In Panic Selloff As VIX Hits 60 | ZeroHedge

This is why some call it a casino. Excessive leverage will greatly amplify moves to the downside as well as the upside.

[MorTech]

I am going to die at 97 years old chasing a candy striper down the hall of the nursing home...Jesus said so.

I have planned accordingly.

[bopat]

Originally Posted by Pballer

Roth conversions don't make sense. Didn't you hear that in the future nobody who earns less than $150,000/year will have to pay income taxes anymore.

Yeah we're gonna have flying cars and hoverboards too

Just love my Roth, no RMDs ever.