Invest In Happy Memories.

Greg Mankiw breaks down tax on investments.

In a nutshell, unless you’re the type of person who makes it now and spends it now, both candidates’ tax plans suck for you. That’s not to say that this is entirely their fault or that it’s something they have control over. This is a fault of how our system is set up.

If you have a second, read this.

(Thanks to Missy for the link.)


  1. Wow. Kinda makes me glad I stopped working to raise kids. And makes me question the true cost when/whether I decide go back.


  2. egirl, I know! I know this won’t make me very popular, but I hope that more and more families are able to and want to move toward a single-income household allowing at least one parent to stay home and raise the kids.


  3. So,
    I thought Obama was only going to raise taxes for rich people. Am I confused?


  4. Those numbers are pretty misleading. They only look at raw money , without the effects of benefits, social services, healthcare, greater economic stimulus, etc.


  5. Sian: That’s ONLY about income tax. This is about other taxes (taxes on investments, etc). Basically, the system and both candidates’ proposals makes it less desirable to invest money since the outcome would reap such a miniscule amount.

    I don’t think we realize how much larger taxes are beyond income tax (and sales). I know that many people we may know don’t invest, but if the incentive to do so falls apart, it will effect everyone, not just those who do.

    I am not sure if that makes sense. I wrote it fast.

    I have to go wipe a baby’s butt right now. Seriously. Holy smell.


  6. Jonathan, I don’t understand what you’re saying. He’s referring to EXTRA money that would otherwise be invested. (Taking on work in order to invest money in your children’s future.)

    Maybe I am missing your point? This isn’t necessarily my area of expertise but I don’t follow.


  7. His view is a really selfish, narrow view of the issue – a broader view might look at increased investment and higher returns on investments under a better-performing economy like Clinton’s or, hopefully, Obama’s – those gains would outpace higher taxes paid because most of the investment would be pre-tax (e.g. 401(k) and other deferred compensation) and would enable other investment activity that could further stimulate the economy. I agree with Paul Krugman (who wrote a comprehensive series of articles this summer on how Democratic presidents typically stimulate the economy more than Republican presidents. He recently won the Nobel Prize for economics.


  8. I’m with Becky. Also, even if people like the author who are doing just fine and are having issues with their investment income don’t benefit greatly under either plan, the fact is that for the majority of Americans, Obama’s plan is far far superior. plus, under a McCain plan, everyone who receives health insurance through their job is screwed. I already pay 3K out of pocket for co-pays etc and I HAVE insurance. Were I paying the 12K+ a year for my even shitter healthcare under McCain, I am not going to be worrying about my 401K. Also, everyone’s ability to buy anything will be severely compromised under McCain and that will drive the economy further into the toilet. So really, I don’t give a damn about Greg’s investment situation, that’s like a splinter in the toe of a patient with a sucking chest wound.


  9. You guys are missing the point. This isn’t about the presidential nominees. I am sorry I even mentioned them. This is about the fact that our system taxes people sometimes four times on investments before said investment reaches its beneficiary. (or the beneficiary is taxed even).

    I realize this is a heated election time, but try and see past that and to his point.

    I’m sorry I brought either one of them up at all. I tried to state that this isn’t the fault of theirs and is instead the fault of our our current system is set up regarding investing in our children’s futures.


  10. Also, I’m not for a second suggesting mccain is the better presidential candidate. Just had to slip that bit in there. Oh boy, no.


  11. The taxed four times thing is only an issue when looked at through the lens of “saving for my kid’s future” though. These tax systems aren’t designed for that specific scenario, and so each of the taxes makes sense (to most) when taken individually. I think the solution is not to eliminate any of these taxes, but to broaden the types of investments for the specific “for my kids” scenario, like 529s etc.


  12. I love your solution, Chandler. And I think it would solve a lot. TJ and I spoke about this together. I wrote this post in haste and I’m kind of regretting that now. I wish I had spent more time with it, which is ironic given the subject matter and the fact that I was knee deep in baby at the time instead. heh


  13. no way, the post is great and surfaces some really important issues, issues which i’m suddenly concerned about :) Saving for kids is such a sticky issue. The estate tax alone is such a polarizing issue (often along class lines and lines of people with and without kids) that it is difficult to talk about. How much of my wealth (ha!) should i be able to pass on without taxes? If i think about when my folks go i can’t really think about the money parts of it. If i try and get away from the emotion, then i get the estate tax, we don’t need aristocracies, but it would also be nice if there was a tax free way to pass on parts of that wealth to specific goals society finds useful, student loans/education, home ownership etc. If i could leave a portion of whatever i have when i die to directly pay off Lee’s student loans (if he has em) that would be great and possibly appease both sides? i dunno, tricky stuff.


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