Don’t Hold Your Breath (Part 2)

There exists a patent relationship between higher taxes and higher GDP.
Based upon the 35 member countries of the OECD, a higher level of taxes correlates to higher GDP three years later.
Statistically, the relationship is significant, but not great. And as always, correlation does not imply causation.

Don’t Hold Your Breath (Part 1)

Taxes are here to stay, but the level of taxation is sure to change over time.
In the U.S., taxes account for about 25% of GDP, which is lower than most of the 35 OECD countries, which averages 33%.
There are tangible benefits to higher tax rates, according to research.

Housing, education, and healthcare costs continue to rise year after year.
The rise in these three categories of spending have outpaced other categories for many decades.
If this trend were to continue unabated, almost all household income will eventually end up going into these three buckets alone.
This path is unsustainable on many levels. Yet, for now there are government programs out there that can help soften the blow. Not ideal, but better than nothing.

The best way to grow wealth is to never pay any taxes.
The simplest way to accomplish this is to take advantage of tax-advantaged investment accounts.
The most common such accounts offered by the U.S. Government are the individual retirement accounts or IRAs.
There are two flavors. The Traditional IRA is funded with pre-tax contributions, but earnings are taxed at an individual’s marginal tax rate at retirement.
The Roth IRA is funded with post-tax contributions, and the earnings are not taxed at all at retirement. Continue reading “Don’t Miss Out, You’ll Regret It (Part 5)” →