Investments? 15% or 40%?

[Joxmb]

In the book it says how to calculate your financial freedom number and it uses the tax rate of 40% (.6) for your investments earning you money. I thought capital gains tax was 15%?

Also is 5% a realistic rate of return? Is this before or after inflation? I thought inflation was 3% on average so 5% would really be only 2%?

Thanks if anyone can give any info on this topic.

 

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[hatterasguy]

Tax rate is at least 40%, maybe closer to 50% when you calculate your total tax burden.

You have federal, State, and sometimes local taxes. My city nails you with stiff property taxes on cars and equipment for example.

Say your federal income tax rate is what 35%? I think that's the highest bracket right now. Throw in 4% for my state, CT, and your at 39%. Throw in all the local taxes on your stuff, etc, and your in the 40% range.

Now when you work for yourself you get the extra fun of making quarterly tax payments so the fun really lasts all year long! Also once your business starts to get a bit more complicated you get to start writing big checks to your accountant as well!

AFAIK right now capital gains is 15% and that's set to expire in January, which hopefully it doesn't.

It really gets old sometimes, I pay bills and get new ones and I'm like WTF didn't I just pay that?

Oh and CT slaps you with a $250 per year LLC fee. Just because.

 

[Joxmb]

Tax rate is at least 40%, maybe closer to 50% when you calculate your total tax burden.

You have federal, State, and sometimes local taxes. My city nails you with stiff property taxes on cars and equipment for example.

Say your federal income tax rate is what 35%? I think that's the highest bracket right now. Throw in 4% for my state, CT, and your at 39%. Throw in all the local taxes on your stuff, etc, and your in the 40% range.

Now when you work for yourself you get the extra fun of making quarterly tax payments so the fun really lasts all year long! Also once your business starts to get a bit more complicated you get to start writing big checks to your accountant as well!

AFAIK right now capital gains is 15% and that's set to expire in January, which hopefully it doesn't.

It really gets old sometimes, I pay bills and get new ones and I'm like WTF didn't I just pay that?

Oh and CT slaps you with a $250 per year LLC fee. Just because.

So it is 15% though after you have no business and live off investments? State I'm from has no income tax but property taxes probably make up a bit for that.

Thanks for replying

 

[Jeremy]

Oh and CT slaps you with a $250 per year LLC fee. Just because.

California pimpslaps you for $800/year....because you suck and California hates you ! LOL

 

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