Why The Middle Class Needs Ron Paul
Lets say you have $100,000 today in your tax tax deferred retirement account. And lets say you are risk adverse like me and put it into a bond fund figuring it would at least keep its value over the next 20 years to my retirement.
Lets say the bond fund get 6% return rather good you would think. So 100k getting 6% interest for 20 years you end up with $331,020.45 pretty good return for being responsible and saving for your future.
But now you are taking it out of your 401k so its time for taxes. Lets just assume federal taxes. And a nice average rate of 28% of your earnings. We "earned" $231,020 so $64,685 will have to go to taxes leaving you with $266,335 left in your bank. But lets not forget your inflation tax. Lets assume a modest 4% per year inflation. That means each year your dollars buy 4% less stuff than the year before.
So the $266,335 you have after 20 years of saving and tax free compounded savings is equivalent to $117,720.72 today. For saving and reinvesting your money for 20 years you earn $886 a year.
Our current system makes savings a suckers game. Ron Paul is the only candidate who address these two taxes that destroy our hard earned wealth.
Just for what what happens if you are in the 35% tax bracket because of other income or state taxes. Well you make $528 a year. And if inflation was instead 4.5% a year you would have LOST -$19.64 each year.
This is unacceptable.
And lets not even talk about what would have happened if it wasn't in a tax deferred account.
Lets say the bond fund get 6% return rather good you would think. So 100k getting 6% interest for 20 years you end up with $331,020.45 pretty good return for being responsible and saving for your future.
But now you are taking it out of your 401k so its time for taxes. Lets just assume federal taxes. And a nice average rate of 28% of your earnings. We "earned" $231,020 so $64,685 will have to go to taxes leaving you with $266,335 left in your bank. But lets not forget your inflation tax. Lets assume a modest 4% per year inflation. That means each year your dollars buy 4% less stuff than the year before.
So the $266,335 you have after 20 years of saving and tax free compounded savings is equivalent to $117,720.72 today. For saving and reinvesting your money for 20 years you earn $886 a year.
Our current system makes savings a suckers game. Ron Paul is the only candidate who address these two taxes that destroy our hard earned wealth.
Just for what what happens if you are in the 35% tax bracket because of other income or state taxes. Well you make $528 a year. And if inflation was instead 4.5% a year you would have LOST -$19.64 each year.
This is unacceptable.
And lets not even talk about what would have happened if it wasn't in a tax deferred account.
posted by Scott at 3:09 PM
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