If someone asked you, “Is your income common or uncommon compared to all the households that file a tax return?” what would be your answer?
Let’s first define “uncommon”. I believe if you’re in the top 25% of income earners and therefore making more than 75% of everyone else in the United States, it’s fair to say, you’re not common. Agree?
So with that said, according to the IRS, what’s the Adjusted Gross Income your household has to show in order to be in the Top 25%? Take a guess. How about the Top 10%? Top 5%? Top 1%? Please, don’t read the rest of this until you assigned a number to each of those. Let’s see how accurate you were with your guesses.
Insert the Jeopardy Theme Song
Here’s how it breaks down:
Top 25% = $80,892
Top 10% = $139,713
Top 5% = $197,651
Top 1% = $480,804
All is takes is about $140k a year and you’re in the TOP 10% in the entire country! Here’s the crazy part…how much of the overall federal tax bill do each of these thresholds pay?
Top 25% pay 85.97% of all income taxes. The bottom 75% of tax payers only pay 14.03% of the entire federal tax burden.
Top 10% pay 69.47% of all income taxes.
Top 5% pay 58.23%! Five percent pay over half the entire income tax collected…unbelievable.
Top 1% pays 37.32%.
I have a question for you: If the Top 25% (YOU!) are responsible for almost 86% of all income tax collected, then why in the HELL would those people follow the exact same advice given to the bottom 75%? If you are in fact uncommon then please, please don’t follow common financial advice.
This advice typically involves using “tax deferred” products (the far more accurate terminology is TAX POSTPONED) like a 401k, IRA, SEP IRA, etc. Be very wary! You’re the biggest tax target on the planet…maybe you shouldn’t pay attention to what everyone else is doing. Do you believe the government will be able to get more money from the bottom 75% in the future? Does it make sense to direct capital into a vehicle that allows the government to take as much from you as they want or need to cover all their obligations (largely for those in the bottom 50%)?
What about the consistent obstacles common advice has to overcome? Seriously, how many times will Americans be okay with losing 30 or 50 or even 70% of what they’ve made to Wall Street before they finally say enough is enough? How many times will they let that happen before they build a strategy that will never lose any money?
If this volatility continues won’t this be happening more often? Doesn’t it usually happen about every six to eight years? Would they be further ahead if they didn’t lose 30 or 50 or 70 percent of your money every six to eight years? If that wasn’t bad enough, won’t they then have to deal with the Internal Revenue Service? Won’t they take 20, 30 or even 40 percent of what’s left? WOW! Isn’t that piling on?
But they are not done yet are they? Now, due to this COVID-19 “stimulus”, they will pour salt in the wound and print an enormous amount of money…AGAIN! Won’t that reduce the purchasing power of the little money people have left? What if none of that had to happen? And even better, what if Americans could take advantage of those occurrences? Wouldn’t that be a better strategy than the one most Americans are using now?
Message me “strategy” and I’ll show you exactly what you can do to take advantage of these opportunities.
You also can watch a quick video of mine here: https://kellydoconnor.com/video1/
Or of course, you can follow the herd and hope everything turns out okay…I mean the government does have your best interests at heart, right?