This blog aims to empower the readers to make better financial decisions. One area that impacts our financial life possibly more than any other factor is taxation. The more you understand the tax code as well as what is being talked about behind the curtains in Washington DC, the better prepared you will be to direct your personal financial life.
The definition of “the rich” has progressively declined since 1913 even in nominal terms. One major step forward was taken by FDR when he came into office. The definition of the rich became $5 million because he was planning to introduce the payroll tax and everyone had to pay. You may or may not think that is a lot of money, but consider that a Cadillac cost $600. And as already stated the definition of being rich has steadily decreased.
We are now hearing the footsteps of a new thing called Modified Adjusted Gross Income (MAGI). Medicaid and the Children’s Health Insurance Program (CHIP), have adopted this new definition of household income which is nothing short of finding was to deny benefits and redefine “the rich.” MAGI is more commonly known as “household” income. The government has already begun to apply this to people with disability. For example, If a parent is disabled and is living with a child, the government wants to reduce the social security benefit because the “household” income is too high, So in a clever way, the government is denying you social security benefits if your combined income with you children exceeds their threshold.
When you hear about “household” income from any political candidate when talking about the income tax beware. This is clearly another thing on some politicians wish list to increase revenues for Washington DC by redefining “the rich.”
Questions to ponder:
- How can you accumulate money/wealth that is not subject to taxation?
- How much money do you want shielded from taxes?
- Who is going to pay for future tax increases, those with money or those without?
- Are you ok with paying more than your share of taxes?