The Motley Fool Discussion Boards

Previous Page

Retirement Discussions / Retire Early CampFIRE

URL:  http://boards.fool.com/thats-weird-its-almost-as-if-high-taxes-reduce-30427740.aspx

Subject:  Re: Taxes Are Much Higher Than You Think Date:  12/12/2012  11:10 AM
Author:  brewer12345 Number:  659630 of 794682

That's weird. It's almost as if high taxes reduce the incentive to work and start businesses.

************************************

I would say it depends on the facts and circumstances. What the tax code does for sure is introduce distortions in the market, and often it is unintended distortions.

Take my DW, for example. A decade ago she quit full time work. We had moved to the burbs and were planning to start a family. DW has two master's degrees from a top shelf university and is highly employable, but I earned more and all her income was effectovely at a high marginal tax rate. So what did she do? Chiefly she chases the kids, but she started a sole proprietorship as well. This allowed her to keep her skills sharp and have some adult contact. It is also highly favored by the tax code. We pass on a variety of potential deductions (home office, etc.) because they are audit flags and could potentially be disallowed according to the letter of the law. Instead, we just use a solo 401k to shelter all of he