Not sure if you're living in the US, but I do and I have the exact opposite viewpoint. The amount of waste, corruption and poor planning by the gov't makes me feel like I'm throwing money away. I'd rather give it a charity since then I'd know a majority of it had an impact.
I think if the gov't was a bit more efficient and could be shown to be good stewards of money I'd probably hate paying taxes a lot less.
"Nobody likes paying high taxes, but I don’t mind."
I think there's an important distinction to be made between two different sorts of "high taxes".
One is a high absolute amount of taxes - you made millions of dollars in a year and therefore your absolute tax payment is relatively quite high.
The other is a high percentage tax rate.
I don't mind paying a high absolute rate of taxes - I think that is the scenario in which one can think fondly of all the things that government provides - things like:
"It's a repayment for all those years I was poor and the government paid for me to live and go to school."
However, there comes a point in percentage tax rates where basic fairness comes into question. I'm sure it varies from person to person, but I think an effective tax rate north of 40% is getting in the danger zone.
As a US citizen who lives in California, in Marin, and owns land, my effective tax rate is 50%, give or take, and I think that's a problem. It's very difficult to rationalize that every 60 minutes I work, ~30 minutes of that work product is appropriated by government.
In the context of living a debt-free existence, I have to disagree.
In the monetary policy environment we live in, having debt is the most sensible way to build wealth.
Dollars are a terrible store of value. Dollars invested in a savings account are almost as bad. Securities, real estate, and inventory are much better. Dollars invested in education and advertising to multiply the value of securities, real estate and inventory are still way better than a savings account.
In an environment where a savings account pays <1% and collateralized debt costs 1-8% and non-collaterlized debt costs 10-20%, the sensible thing is to borrow as much as you can and invest it wisely.
In such an environment, I'd be proudest paying cap gains tax at 15% than income tax updwards of 25%.
I'd feel better about paying my taxes if they were well-spent, and not patently wasted on wars, cronyism, and the latest political whims. Some of that is to be expected, but the degree of waste in the US system is appalling and seemingly nearly total.
After all, if you take pride in fresh new road surfaces and good schools, you also have to take some responsibility for our foreign policy.
If you enjoy paying taxes, here's an offer: Why don't you pay some of mine? The point is, folks who advocate for higher taxes aren't being altruistic, they're advocating for everyone else to be paying more.
I also don't like taxes but I like seeing lepers in the street, driving over holes in the road, having my kids acquire debt to go to school etc even less. Paying taxes is completely selfish.
To the people saying that debt is not so bad, please realize that you get that debt from a private institution that subsequently collects interest. Said institution does not have to work for this interest, it merely has to sign your debt into existence. The monetary system we have now, where money is always created as debt by a group of elites with specials rights is not fair.
I don't mind paying property and local taxes for this reason, but if my Federal taxes are going to go toward building that fucking wall, I will do everything I can to avoid paying them.
I also don't mind paying a lot of taxes. But I wish I could pay more than the tiny amount I pay to my state, and less than the huge amount I pay to the federal government, so that I could have a louder voice in how the money is being spent. I can't see how we would transition from where we are now to that system, though. I wouldn't want to see state taxes massively raised before massively lowering federal taxes, and I wouldn't want to see federal taxes massively lowered before we have replaced a lot of critical federal programs at the state level. So I've settled on being ok with paying lots of taxes the current way, where a lot gets "wasted" on things I would prefer not to pay for, but a lot also gets spent on things I believe improve my life.
> Paying my taxes is a point of pride for me. It's a repayment for all those years I was poor and the government paid for me to live and go to school.
Spoken like someone who wasn't on the receiving end of bombs, troops, torture, imprisonment, or theft to enrich the already rich - you know, the bulk of government spending.
I pay my taxes in order to avoid being a victim of state violence, but when I do, I say a prayer for the victims of my failure to be strong enough to do the right thing, which is to deprive the state of the means to do evil.
There was a point where financing the government was a patriotic act. People would give other people War Bonds as presents. But now the patriotic thing is to trash talk which ever party is in the administration and wax poetic about governmental corruption. You can't have it both ways. You can't say no to financing your government and scorn corruption. Either you're okay paying for your government, you're okay with someone else paying for your government (to possibly include other governments!), or you're okay with your government paying for itself with printed money. (That last option, seignorage, leads to hyperinflation.)
The government needs better PR frankly, instead of allowing itself to be a punching bag all day. Nobody can even imagine how many things the government and your tax dollars provide.
There is a much bigger and simpler reason people stopped gifting bonds, interest rates are garbage. War bonds aren't even available right now, but there are still general government bonds and treasury bills.
The interest rate is so low on them that the growth is basically a slap in the face to whoever is receiving it and cash would be better because they could at least use it at the present time. Remember, once you buy a bond like that, the interest rate is locked in so you're stuck with the crap 2% for 27 years on the bond you bought from the government 3 years ago.
People also used to gift corporate bonds (e.g. from railroad or utility companies) and that's a dead practice as well for the same reason.
There's that last option where you would be ok with having no government at all. Although, governments usually do not offer it except maybe in Liechtenstein.
Can't you be OK with contributing to the system and still talk trash about the people working in the system? The system is a separate thing from the people involved in it.
Now turn it around. What is money? Money is someone else's debt. Money is a promise that someone else will go to work for you in the future to pay it back.
I wish more people thought this way. Debt can be be used effectively, but as Uncle Ben said, "With great power comes great responsibility." It seems that too much of America is wooed into a false sense of security by their ability to obtain debt without judging their ability to pay that debt off.
I agree with your sentiment, but it strikes me that there is safety and opportunity in behaving badly when the bulk of your peers are swept away in an orgy of debt fuelled spending.
Ten years ago I bought a small flat in London to live in. I paid a respectable deposit and didn't over-leverage. We were at the end of decade long property boom, there were huge concerns about the level of borrowing and ability to repay, predictions of mass repossessions if the BoE raised rates by even a quarter percent, the BoE would regularly "jaw-bone" the fact that the rate must rise[1].
The bank wanted to lend me 5x the amount I borrowed. I could have bought an entire 3 bedroom house rather than just a 1 bed flat situated in the same property. I borrowed within my bounds, priced the debt relative to an upward BoE rate, played it sensible.
What a missed opportunity! In retrospect I should have taken all the cash the bank wanted to throw at me and bought the whole house. I would have been able to manage the repayments fine, and financially I would be light-years ahead of where I am now.
All because the government will literally burn anyone to keep those vested in the housing market safe (particularly I reference the U.K/NZ/AU, I assume the U.S.A is similar).
Behave badly in droves and the government will never raise that BoE rate. They will burn savers, they will continue to inflate the housing bubble, they will set fire to the hopes of anyone under the age of 30 buying a house to live in. Literally anything to save the retirement nest-egg of a generation of baby-boomers, aided and abetted by a generation of baby-boomer politicians.
Only external factors will bring an end. In the U.K that may be Brexit (as external as that is), in AU that may be Chinese capital controls.
Until those external factors are applied you're fine misbehaving. For me, behaving respectably was a mistake.
[1] The rate today is 0.25%, an all-time historic low. The rate when I bought was 0.5%, at the time an all-time historic low.
Most Americans are using debt to buy consumer goods. So the question most should ask themselves is, "As a citizen of a first world country, with a good job and a super high standard of living, why is it that I need to consume some of tomorrow's dollars to get myself even more stuff right now?"
Debt is new currency. If everyone is buying their cars with credit, soon nobody can afford to buy with cash. Around here even if you have decent wage right now, but not a stable job, you can't get credit to buy a house, while someone with a low pay but stable job can, you're effectively poorer than them.
It used to be common to view personal debt this way.
I noticed a big change in the way debt was perceived by during the late '80s. Since then, debt is seen as normal. I'm pretty sure the finance industry has pushed 'Fractional reserve banking' to the limit to allow unchecked borrowing for land and housing. [0]
It surprises me all the time to see what you can do with a CC in America. Here in Europe it's also very common to have a direct debit card. You don't have a monthly bill, but the amount you spend is directly deducted from your account. Lots of people prefer that.
I view debt as gambling against future prosperity. It's a faustian deal you make with yourself to steal your own future earnings to use today. What a bittersweet deal (most of the time)
This is fantastic advice for 95% of people. If you one of the few that can manage debt responsibly, however, you'd be missing out on the opportunity for leverage. In many cases a person can effectively trade their good credit for additional returns.
Of course, you need to fully understand the risk/return profile of any leveraged investment you make AND be careful not to be overleveraged at any point. It's a fine line to walk, but it can be a valuable part of your investment portfolio.
Debt conversations always have these weird grandpa rules of thumb and words of wisdom, as you can see in the other comments.
The proper use of debt is to match the debt with the asset. If you are buying a house, a 25-year mortgage matches the value of the house. If you are buying a car, a 5-year loan matches the value of the car. If you are buying a sandwich with a credit card, well... you should pay off your credit card at the end of the month because that sandwich is long gone.
> If you are buying a house, a 25-year mortgage matches the value of the house
The exchange price of the house does not have any intrinsic value, while generally speaking the cash money you owe to some external entity like a bank tends to keep its value in most of the cases (the Venezuela- and Zimbabwe-like cases are few and far between). In other words, you're betting that a real-estate crash won't happen before you end up paying your debt.
The problem is that debt starts modifying your behavior.
If you are in debt you are more likely to tolerate conditions you don't enjoy, e.g: if you live paycheck to paycheck, being happy at your job is not your top priority.
"Once I did that risky thing, leaving the only profession I knew to become a professional writer and TV guy, I was, and continue to be, very careful about the decisions I make every day."
Bourdain is an OG. I've always admired his candor and ability to reflect on the things most important in life (and he knows it first-hand, having traveled nearly every where) -- time, lack of stress, and the enjoyment of good food with good people. Cheers!
If your return on capital is higher than the interest rate, you should take on debt. If it's not (and for most it's not), then you shouldn't. Pretty simple.
Anyhow, the article is an interesting anecdote about Bourdains life, but has little to do with money. He makes money from TV and books, can live comfortably because he makes quite a bit, but he's no financial savant.
Off topic, but why did the creator of this site make the top bar move when scrolling? That makes it 100% impossible to read for people who use the top of the screen as a line to read along. Also, is their a chrome extension to cancel that functionality?
> Nobody likes paying high taxes, but I don’t mind.
It's actually amazing how little most Americans pay in taxes yet we complain. This year my effective tax rate was ~8%. Of course this is by using every legal tax shelter available.
Considering what I get from the Federal government here in the US, I think 8% is actually fair. If it spent more of my money doing thing like taking care of home and quit with the empire building I'd be happy to pay more.
I've been to a couple of his tour stops, where he gives talks about various topics (usually food and travel and his TV shows are the main things discussed). If you find Bourdain interesting, you'll probably find his talks quite entertaining.
Anyways, at one of his shows he straight up said that each of his stops pays for a year of private schooling in NYC for one of his kids. Thought it was an interesting way of looking at things.
You obviously didn't read the article. Bourdain did not reach the magical 'no-debt' world of wonder until after he got famous.
If anything it's a fake-cautionary tale. "Don't do what I did kids, even though I'm rich and did more blow and had way more fun than you'll ever have in your whole life!"
> I didn’t put anything aside, ever. Money came in, money went out. I was always a paycheck behind, at least. I usually owed my chef my paycheck: again, cocaine. Like I said, until I was 44, I never even had a savings account.
Anyone who has ever spent any of their money on class 'A' drugs is not in any position to dispense any type of wise financial advice.
[+] [-] vinhboy|9 years ago|reply
How refreshing.
I agree with him.
Paying my taxes is a point of pride for me. It's a repayment for all those years I was poor and the government paid for me to live and go to school.
[+] [-] refurb|9 years ago|reply
I think if the gov't was a bit more efficient and could be shown to be good stewards of money I'd probably hate paying taxes a lot less.
[+] [-] rsync|9 years ago|reply
I think there's an important distinction to be made between two different sorts of "high taxes".
One is a high absolute amount of taxes - you made millions of dollars in a year and therefore your absolute tax payment is relatively quite high.
The other is a high percentage tax rate.
I don't mind paying a high absolute rate of taxes - I think that is the scenario in which one can think fondly of all the things that government provides - things like:
"It's a repayment for all those years I was poor and the government paid for me to live and go to school."
However, there comes a point in percentage tax rates where basic fairness comes into question. I'm sure it varies from person to person, but I think an effective tax rate north of 40% is getting in the danger zone.
As a US citizen who lives in California, in Marin, and owns land, my effective tax rate is 50%, give or take, and I think that's a problem. It's very difficult to rationalize that every 60 minutes I work, ~30 minutes of that work product is appropriated by government.
[+] [-] padobson|9 years ago|reply
In the monetary policy environment we live in, having debt is the most sensible way to build wealth.
Dollars are a terrible store of value. Dollars invested in a savings account are almost as bad. Securities, real estate, and inventory are much better. Dollars invested in education and advertising to multiply the value of securities, real estate and inventory are still way better than a savings account.
In an environment where a savings account pays <1% and collateralized debt costs 1-8% and non-collaterlized debt costs 10-20%, the sensible thing is to borrow as much as you can and invest it wisely.
In such an environment, I'd be proudest paying cap gains tax at 15% than income tax updwards of 25%.
[+] [-] M_Grey|9 years ago|reply
After all, if you take pride in fresh new road surfaces and good schools, you also have to take some responsibility for our foreign policy.
[+] [-] KKKKkkkk1|9 years ago|reply
[+] [-] teekert|9 years ago|reply
To the people saying that debt is not so bad, please realize that you get that debt from a private institution that subsequently collects interest. Said institution does not have to work for this interest, it merely has to sign your debt into existence. The monetary system we have now, where money is always created as debt by a group of elites with specials rights is not fair.
[+] [-] thebigspacefuck|9 years ago|reply
[+] [-] sanderjd|9 years ago|reply
[+] [-] jMyles|9 years ago|reply
Spoken like someone who wasn't on the receiving end of bombs, troops, torture, imprisonment, or theft to enrich the already rich - you know, the bulk of government spending.
I pay my taxes in order to avoid being a victim of state violence, but when I do, I say a prayer for the victims of my failure to be strong enough to do the right thing, which is to deprive the state of the means to do evil.
[+] [-] Ntrails|9 years ago|reply
Not to mention an investment in the costs you'll impose upon the state in your dotage.
[+] [-] Shivetya|9 years ago|reply
there are those who don't know how much they pay, they just know what they take home
there are those who know their income tax, medical, etc, deductions are
and then there are those who see other avenue of taxation that effects the price of goods and services we make use of
I have no problem paying my taxes but why would be happy about it when I cannot recall a single government out there that is using them responsibly?
[+] [-] unknown|9 years ago|reply
[deleted]
[+] [-] overcast|9 years ago|reply
[+] [-] marknutter|9 years ago|reply
[+] [-] ianai|9 years ago|reply
[+] [-] taurath|9 years ago|reply
[+] [-] hueving|9 years ago|reply
The interest rate is so low on them that the growth is basically a slap in the face to whoever is receiving it and cash would be better because they could at least use it at the present time. Remember, once you buy a bond like that, the interest rate is locked in so you're stuck with the crap 2% for 27 years on the bond you bought from the government 3 years ago.
People also used to gift corporate bonds (e.g. from railroad or utility companies) and that's a dead practice as well for the same reason.
[+] [-] patrickaljord|9 years ago|reply
[+] [-] jasonkostempski|9 years ago|reply
[+] [-] jMyles|9 years ago|reply
[+] [-] comice|9 years ago|reply
Taxes destroy money (and create demand for dollars, which is important :)
Hyperinflation doesn't happen when there is too much money, it happens when there isn't enough stuff to buy with it.
Lots of ignorance of monetary theory on HN!
[+] [-] grecy|9 years ago|reply
i.e. if I have debt now, I must go to work in the future to pay it back.
Because I have no debt, I don't have to go to work, and can spend the next two years driving around Africa.
I'm so passionate about saving money I even wrote an e-book on how to do it: http://theroadchoseme.com/work-less-to-live-your-dreams
[+] [-] harryh|9 years ago|reply
[+] [-] camillomiller|9 years ago|reply
[+] [-] SN76477|9 years ago|reply
I do not however like to save money, I prefer to invest it.
I will get your ebook, thanks for the info.
[+] [-] amelius|9 years ago|reply
And how do you feel about venture capital?
[+] [-] kevinmannix|9 years ago|reply
[+] [-] d_t_w|9 years ago|reply
Ten years ago I bought a small flat in London to live in. I paid a respectable deposit and didn't over-leverage. We were at the end of decade long property boom, there were huge concerns about the level of borrowing and ability to repay, predictions of mass repossessions if the BoE raised rates by even a quarter percent, the BoE would regularly "jaw-bone" the fact that the rate must rise[1].
The bank wanted to lend me 5x the amount I borrowed. I could have bought an entire 3 bedroom house rather than just a 1 bed flat situated in the same property. I borrowed within my bounds, priced the debt relative to an upward BoE rate, played it sensible.
What a missed opportunity! In retrospect I should have taken all the cash the bank wanted to throw at me and bought the whole house. I would have been able to manage the repayments fine, and financially I would be light-years ahead of where I am now.
All because the government will literally burn anyone to keep those vested in the housing market safe (particularly I reference the U.K/NZ/AU, I assume the U.S.A is similar).
Behave badly in droves and the government will never raise that BoE rate. They will burn savers, they will continue to inflate the housing bubble, they will set fire to the hopes of anyone under the age of 30 buying a house to live in. Literally anything to save the retirement nest-egg of a generation of baby-boomers, aided and abetted by a generation of baby-boomer politicians.
Only external factors will bring an end. In the U.K that may be Brexit (as external as that is), in AU that may be Chinese capital controls.
Until those external factors are applied you're fine misbehaving. For me, behaving respectably was a mistake.
[1] The rate today is 0.25%, an all-time historic low. The rate when I bought was 0.5%, at the time an all-time historic low.
Saving in the U.K the last decade? Sucks to be you: https://qz.com/750443/the-bank-of-england-just-cut-interest-...
[+] [-] charlieflowers|9 years ago|reply
[+] [-] lastyearman|9 years ago|reply
[+] [-] bootload|9 years ago|reply
It used to be common to view personal debt this way.
I noticed a big change in the way debt was perceived by during the late '80s. Since then, debt is seen as normal. I'm pretty sure the finance industry has pushed 'Fractional reserve banking' to the limit to allow unchecked borrowing for land and housing. [0]
Reference
[0] "fractional-reserve banking permits the money supply to grow beyond the amount of the underlying base money originally created by the central bank" ~ https://en.wikipedia.org/wiki/Fractional-reserve_banking
[+] [-] camillomiller|9 years ago|reply
[+] [-] err4nt|9 years ago|reply
[+] [-] nkozyra|9 years ago|reply
It depends. On a lot of things.
[+] [-] mmastrac|9 years ago|reply
Of course, you need to fully understand the risk/return profile of any leveraged investment you make AND be careful not to be overleveraged at any point. It's a fine line to walk, but it can be a valuable part of your investment portfolio.
[+] [-] appleiigs|9 years ago|reply
The proper use of debt is to match the debt with the asset. If you are buying a house, a 25-year mortgage matches the value of the house. If you are buying a car, a 5-year loan matches the value of the car. If you are buying a sandwich with a credit card, well... you should pay off your credit card at the end of the month because that sandwich is long gone.
[+] [-] paganel|9 years ago|reply
The exchange price of the house does not have any intrinsic value, while generally speaking the cash money you owe to some external entity like a bank tends to keep its value in most of the cases (the Venezuela- and Zimbabwe-like cases are few and far between). In other words, you're betting that a real-estate crash won't happen before you end up paying your debt.
[+] [-] partycoder|9 years ago|reply
If you are in debt you are more likely to tolerate conditions you don't enjoy, e.g: if you live paycheck to paycheck, being happy at your job is not your top priority.
[+] [-] bootload|9 years ago|reply
Sage advice. Here's the link to the book publishing mentioned ~ http://www.eater.com/2012/2/22/6611779/the-lineup-for-anthon... / http://www.publishersweekly.com/pw/by-topic/industry-news/pu...
[+] [-] Draiken|9 years ago|reply
I pay my credit card, pay my taxes and my mortgage, but that takes almost all my money away. So if I look at it my net worth it is basically negative.
Only way I'll get to the debt free nirvana is if I get rich somehow. It's not a real choice. So the entire premise of the article is pretty weak.
[+] [-] doctorcroc|9 years ago|reply
[+] [-] Mikeb85|9 years ago|reply
Anyhow, the article is an interesting anecdote about Bourdains life, but has little to do with money. He makes money from TV and books, can live comfortably because he makes quite a bit, but he's no financial savant.
[+] [-] wtvanhest|9 years ago|reply
[+] [-] alistproducer2|9 years ago|reply
It's actually amazing how little most Americans pay in taxes yet we complain. This year my effective tax rate was ~8%. Of course this is by using every legal tax shelter available.
Considering what I get from the Federal government here in the US, I think 8% is actually fair. If it spent more of my money doing thing like taking care of home and quit with the empire building I'd be happy to pay more.
[+] [-] strictnein|9 years ago|reply
Anyways, at one of his shows he straight up said that each of his stops pays for a year of private schooling in NYC for one of his kids. Thought it was an interesting way of looking at things.
[+] [-] 2color|9 years ago|reply
[+] [-] vinceguidry|9 years ago|reply
If anything it's a fake-cautionary tale. "Don't do what I did kids, even though I'm rich and did more blow and had way more fun than you'll ever have in your whole life!"
Ugh.
[+] [-] teslaberry|9 years ago|reply
[deleted]
[+] [-] Theodores|9 years ago|reply
Anyone who has ever spent any of their money on class 'A' drugs is not in any position to dispense any type of wise financial advice.