Thursday, April 22, 2010

Silly Roth IRA Math Revisited

It has been brought to my attention that I am just a "lame blog author" who has not factored in the tax codes of the 1970s into my analysis.

It was my conclusion that locking in a 28% tax rate was a bad idea for the majority of taxpayers. It was an anonymous commenter's opinion that I was a fool.

I therefore wish to factor in the tax codes of the 1970s and see what changes. I've used the average weekly wages as seen in the latest BLS employment report to generate the expected taxes if our tax code was the same now as it had been in 1970. This math is based on a single filer.



Even if the tax structure of the 1970s repeats, 18.7% is still less than 28%. Note that this analysis does not even factor in deductions and personal exemptions. That income isn't even taxed at all.

This notion that taxes for most people will rise in retirement is one of the biggest scams of the financial industry. That was my conclusion when I wrote the original post and that's still my opinion now. The gravestone stands.




See Also:
Silly Roth IRA Math

Source Data:
U.S. Federal Individual Income Tax Rates History, 1913-2010
BLS: Employment Situation Summary
St. Louis Fed: CPI-U

6 comments:

EconomicDisconnect said...

Now you know I have issues with math!

Stagflationary Mark said...

GYSC,

Everyone has issues with math at some point!

It is uncommon to fire all six shots of a revolver with great suddenness when one would probably be sufficient, but many things in the life of Herbert West were uncommon. - H.P. Lovecraft

EconomicDisconnect said...

I have a ripper of a post almost done, take a look!

Stagflationary Mark said...

GYSC,

You don't really expect me to go looking for posts that are almost done do you?

Okay, okay. I looked. It wasn't posted yet though. Hahaha!

EconomicDisconnect said...

Its up smarta-----!

Im almost on vacatuon, cut me a break.

Unknown said...
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