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Is there a maximum marginal rate beyond which would curtail working as a doc?

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  • Panscan
    replied
    She will never be president but aoc might

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  • FIREshrink
    replied
    You are all underestimating E Warren's wealth taxes and investment taxes. Planning to live on your investments is going to get much more expensive when she is president.

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  • EntrepreneurMD
    replied
    Shift more of one's income stream to tax free (ie. bonds), tax deferred (business and real estate appreciation to wait out a high tax president), real estate and equipment tax depreciation, and long term capital gains. One can hold off selling real estate or a business during the term(s) of a high tax president.

    If employed, one can consider quitting their job and finding a higher paying position so that after tax income doesn't suffer, especially if your pay is below average. That may involve considering the impacts of geographic arbitrage, including a move to a no income tax state which also tends to come with higher average physician pay and to low COLA/sales tax areas on necessities (housing, food, clothing, property tax, education, labor (think babysitting and car repairs) etc.)

    If one owns a practice, the growth of the practice can offset tax increases by mitigating or preventing altogether take home decreases.

    I would not give up one's passion over income concerns, unless I found a new passion to pursue. I'd feel selfish and probably a loss of identity. I'm probably FI, so it's more palatable for me to work for purpose with any future income being a secondary benefit.

    Higher taxes will impact those who are new in their career hardest. They generally don't have as many options (ie. business ownership), limited NW, certainly not FI. With less take home in a higher tax environment, the benefit of compounding can be significantly reduced over the decades.

    That being said, I don't believe that even a Democratic president will have the will to materially increase taxes on high (physician level) earners despite the primary talking points which sound good to the voting poor.  Many high earners and billionaires are their constituents.They'll likely target big corporations over individual incomes. I'm more concerned with the prospect of a healthcare monopoly not in terms of physician incomes but in terms of patient access to quality care.

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  • G
    replied




    I really wish we would get to a point as a forum where we spent as much time worrying about actual, current financial policy as we do about early primary proposals. I’m not holding my breath on this.
    Click to expand...


    MPMD, I completely agree with you on the one hand.  On the other...I am concerned with the seemingly widespread acceptance of "the rich should/will pay for everything" mentality.

    As for Vagabond's question, I suppose there are two issues:

    1) It makes it harder to reach "enough."

    2) When you have "enough" you're more sensitive to being squeezed.

    The brackets matter for me, but I also have the luxury of being able to respond to them.  So for me, it is more the brackets as opposed to the rate that matters.  So far, my un-rich part-time income seems to be (mostly) excluded in proposals that I have seen.  (Earned income, at least.)

    From my observations, most docs do not understand taxes nor do they have the financial/lifestyle ability to worry about the marginal rate.  Therefore, I doubt that we'll see much change in the overall workforce--aside from the death by a thousand paper cuts type of thing.

    I've been lambasted here before with my "Who is John Galt" refrain...but I already have one foot out the door and the momentum is in that direction....

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  • Craigy
    replied
    We're already there.

    From a personal standpoint, I already encourage my doctor spouse to not take any additional shifts, call, etc.-- it's just not worthwhile after taxes come out. Ultimately the plan is to go to something like .8 time or half time (and of course retirement).  And these rates are great compared to pre-86, and anything the left is proposing.

    Yeah at some point employers will be forced to pay their employees as "subcontractors" etc but eventually that loophole will be closed.

    At higher echelons, earned income will find ways to be treated as "capital gains."  But for the rest of us, it will separate the haves from the have-nots even further.

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  • Lithium
    replied
    When I was fresh out of residency and a massive supersaver, not only did I think I was paying too much income tax, but I didn't like how little a percentage of my savings I could put in tax-protected space.  Even now, well over half of my investments are in lame taxable accounts, some in subpar ETF's I can't really sell due to low basis.  I'm up to nearly ~$20,000 in taxable dividends a year and wish I had a way to stuff more of that money in my 401k or even better my Roth IRA.

    If your goal is to hit some dollar number in your investment accounts then punch out, working less not only saves you income taxes (and is thus more efficient), but also allows you to put a higher percentage of your investments in tax-protected space.  This can be advantageous for tax planning, retirement spending, and estate planning.

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  • bean1970
    replied
    my entire salary, even now cutting back is taxed entirely at current marginal rate.   i have no state tax...my hunch would be if i'm pocketing less than 50% of my income...i might as well call it quits completely.

    i think that is one of the pitfalls of pushing up the marginal rates...many of these people (which would include even us) could just throw in the towel and live off our investment income (which hopefully would still be a lower %..at least lower than ordinary rates)...essentially lowering how much all these people throw into the tax pool.  The increase would be a disincentive to continue to be a hefty taxpayer.    Let's say i pay $130 in annual taxes (made up number)...if i quit now vs working another 10 years that is a minimum of over a million dollar tax loss to the government....and that is just me......

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  • Kamban
    replied
    I already work part time. If the taxation goes up substantially I might just retire completely and do the occasional work / medical volunteering to keep my license alive.

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  • VagabondMD
    replied




    Yeah us young guys do not have much of a choice.  Better 50 cents on the dollar then nothing.  However it does make you think about working harder then you want to just fro money.  I have “opportunities” all the time to fill in at our urgent care.  I do occasionally when they get desperate and offer extra on top of usual pay.  Knowing that a larger chunk is going to taxes for money I really do not need I might keep my Friday night.
    Click to expand...


    That’s sort of the point, too. Why burn yourself out keeping 40-50% when could perhaps work longer and less up front and retain more of your earnings over time? This assumes that you have the ability to crank your work/compensation level up/down

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  • DDSonFIRE
    replied
    Lately I earn enough by about June to be in the highest Tax bracket. It is a little depressing to think that the entire second half of the year I'm only earning about 50 cents on the dollar (with state tax included). For me though I have a goal to retire early with a set target amount, and 0 cents on the dollar will just delay that.

    I think in the 1970s the top Tax bracket was 70%... ouch

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  • Lordosis
    replied
    Yeah us young guys do not have much of a choice.  Better 50 cents on the dollar then nothing.  However it does make you think about working harder then you want to just fro money.  I have "opportunities" all the time to fill in at our urgent care.  I do occasionally when they get desperate and offer extra on top of usual pay.  Knowing that a larger chunk is going to taxes for money I really do not need I might keep my Friday night.

    Leave a comment:


  • FIREshrink
    replied
    I'm currently at 32%. Not self employed and no state tax. So I could take a bit of a hit and still be a team player. Above 45% I'm probably losing interest though and being FI might go hiking instead. I realize many are already paying this.

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  • artemis
    replied
    That would probably be just the push I’d need to retire from medicine (or to go to part-time, if I could work such an arrangement out with my group).  At this point in my career, I’m only working for the money; if it goes, I go.  If I decided later that I could use a little more spending money in retirement, I’ve already mastered saying “Would you like fries with that?”.

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  • VagabondMD
    replied




    I really wish we would get to a point as a forum where we spent as much time worrying about actual, current financial policy as we do about early primary proposals. I’m not holding my breath on this.
    Click to expand...


    The proposal got me thinking about this question, and this post is not about the proposal, per se. The discussion can be launched without the article and the proposal, and I considered not linking to the article.

    It really is about if/where you would draw the line. For some people, it might be choosing not to work in a state with a state income tax (though they often get you somewhere else) or perhaps working up to a bracket cutoff that is already in place (perhaps the 24/32 cutoff).

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  • MPMD
    replied
    I really wish we would get to a point as a forum where we spent as much time worrying about actual, current financial policy as we do about early primary proposals. I'm not holding my breath on this.

    Leave a comment:

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