twa Posted January 25, 2015 Share Posted January 25, 2015 the rich have far better options than those Link to comment Share on other sites More sharing options...
Slateman Posted January 25, 2015 Share Posted January 25, 2015 Again no It is not a tax on rich people. The middle class hold the vast majority of these accounts. How many have posted in this thread alone stating they have them for their kid or kids? So far Springfieldskins, Forehead, and myself have stated we have got them. I'm certainly middle class what about the other two of you? Think we all three use the Coverdell IRA that has a $2k limit each year. A $2K limit is not a vehicle for the rich by any means and if you make more than a certain amount you can't even put the 2K in it starts going down. So yeah it is a blatant lie to state these accounts are primarily used by the rich. If you're only putting 2k in it, you're not doing your kids a whole lot of favor. College tuition is only going to increase and by the time your kids go to school, the minimum is going to be grad school. I know plenty of people who have been socking at 10k or more a year for college. But if it's not a tax on the rich then who is it a tax on? The middle class? The poor? I mean the only reason you institute something like this is to generate revenue. If not from the rich, then from who? Link to comment Share on other sites More sharing options...
Springfield Posted January 25, 2015 Share Posted January 25, 2015 I don't think what we got was a coverdall. That doesn't seem familiar to me. It is a 529 and through the state of VA because we will be able to deduct that on our taxes this year. We put in $10k (an inheritance is the only time we will able to put something like that in) to start. I assume, over so many years and starting from such a high amount we are going to accumulate a lot market gains. It would be a shame to have to pay taxes on it when the program was designed to incourage exactly what we did (and we did that BECAUSE) of the tax benefit. Again, why not put that $10k in a different account, one that I might be able to actually touch? Link to comment Share on other sites More sharing options...
nonniey Posted January 25, 2015 Author Share Posted January 25, 2015 If you're only putting 2k in it, you're not doing your kids a whole lot of favor. College tuition is only going to increase and by the time your kids go to school, the minimum is going to be grad school. I know plenty of people who have been socking at 10k or more a year for college. But if it's not a tax on the rich then who is it a tax on? The middle class? The poor? I mean the only reason you institute something like this is to generate revenue. If not from the rich, then from who? 2K a year is the maximum amount you can put in it (I will have put 32K in by the time she turns 18). Some 529s allow up to 14K year but those are a bit restrictive on where you can use them (usually tied to a particular state so that didn't meet my needs given my profession). As for not doing my daughter a favor I'm hoping to have 100-120K in the account by the time she goes to college in 6 years (so far been fortunate with the stocks I picked - knock on wood). Plus she'll get my GI bill. As for the last question it would primarily be a tax on the middle class they are the ones who mostly use this vehicle for savings (or more specifically a tax on their kids). Link to comment Share on other sites More sharing options...
chipwhich Posted January 25, 2015 Share Posted January 25, 2015 It doesn't. One can always borrow for college, one cannot borrow for retirement. Yeah there is a lot americans spend on their kids that could go towards retirement. Individual situations vary. I'm not an investor by any means. Im trying to accumulate enough wealth that I can afford to risk some. I would love to be your adviser Link to comment Share on other sites More sharing options...
Slateman Posted January 25, 2015 Share Posted January 25, 2015 As for the last question it would primarily be a tax on the middle class they are the ones who mostly use this vehicle for savings (or more specifically a tax on their kids). So it's truly an awful idea then. Link to comment Share on other sites More sharing options...
Springfield Posted January 25, 2015 Share Posted January 25, 2015 I would love to be your adviser For serious? I would love to learn more and get advice. Link to comment Share on other sites More sharing options...
PeterMP Posted January 25, 2015 Share Posted January 25, 2015 Again no It is not a tax on rich people. The middle class hold the vast majority of these accounts. 70% of the money in the accounts is for households that make over $200,000. Which puts people somewhere near the top 5% (if not even higher). See my post back on page 1. It is primarily a tax on the rich (the top 5% are not the middle class), that at the same time simplifies the tax code. Link to comment Share on other sites More sharing options...
chipwhich Posted January 25, 2015 Share Posted January 25, 2015 I would love to learn more and get advice. I am here to serve. It is primarily a tax on the rich, that at the same time simplifies the tax code. You still haven't explained how. Link to comment Share on other sites More sharing options...
PeterMP Posted January 25, 2015 Share Posted January 25, 2015 I am here to serve. You still haven't explained how. See post 33. Link to comment Share on other sites More sharing options...
chipwhich Posted January 25, 2015 Share Posted January 25, 2015 See post 33. That's about as simplifying as taking a piece of hay out of a haystack. And we don't even know what it would cost to remove that piece of hay. That in no way simplifies the tax code. Stuff changes slightly every year in the tax codes. I guess if that makes you sleep better on the topic. Link to comment Share on other sites More sharing options...
nonniey Posted January 25, 2015 Author Share Posted January 25, 2015 70% of the money in the accounts is for households that make over $200,000. .......... ......Says the President. But Slightly over half of all the college-saving accounts are held by Americans making under $150,000 a year, according to a 2012 Government Accountability Office report. About 30% earned under $100,000 a year. Says the nominally neutral GAO. And even in the President's statistics his cut line is within the Middle Class . BTW200K? what happened to his golden 250K line? (- wanna bet if he used his 250K line the figure would be approaching 0% for those making over 250K using these types of accounts?). Link to comment Share on other sites More sharing options...
PeterMP Posted January 25, 2015 Share Posted January 25, 2015 ......Says the President. But Slightly over half of all the college-saving accounts are held by Americans making under $150,000 a year, according to a 2012 Government Accountability Office report. About 30% earned under $100,000 a year. Says the nominally neutral GAO. Wealthy people have more money to put in their 527s than less wealthy people? I'm shocked! Do you have a link to the GAO report? Link to comment Share on other sites More sharing options...
Hersh Posted January 25, 2015 Share Posted January 25, 2015 I was just saying it's obviously something that won't pass, so why would O put it out there. Because he can wave obstructionism? Could be a negotiating position. Obama really wants to get something else so he starts with something that he knows won't go anywhere and it gives Republicans a "win." Link to comment Share on other sites More sharing options...
twa Posted January 25, 2015 Share Posted January 25, 2015 the truly rich can simply shift money to their kids and tuition/fees is tax deductible on the money they draw the less wealthy have less options, especially if this passed Link to comment Share on other sites More sharing options...
chipwhich Posted January 25, 2015 Share Posted January 25, 2015 Wealthy people have more money to put in their 527s than less wealthy people? I'm shocked! Do you have a link to the GAO report? Google is your friend http://www.gao.gov/products/GAO-13-64 the truly rich can simply shift money to their kids and tuition/fees is tax deductible on the money they draw the less wealthy have less options, especially if this passed Yeah the wealthy will have options, the middle class will get the "benefit" of this new deal. Link to comment Share on other sites More sharing options...
Hersh Posted January 25, 2015 Share Posted January 25, 2015 ......Says the President. But Slightly over half of all the college-saving accounts are held by Americans making under $150,000 a year, according to a 2012 Government Accountability Office report. About 30% earned under $100,000 a year. Says the nominally neutral GAO. And even in the President's statistics his cut line is within the Middle Class . BTW200K? what happened to his golden 250K line? (- wanna bet if he used his 250K line the figure would be approaching 0% for those making over 250K using these types of accounts?). Here is the GAO report. As currently designed, 529 college savings plans benefit a small percentage of U.S. families. In general these families tend to be wealthier than others. It is not clear whether the $1.6 billion in federal tax expenditures that these plans represent strategically targets limited federal resources. Although 529 plans do help some families save for college, families with less income and who are uncertain about whether their children will attend college may have less incentive to invest resources in 529 plans than in other forms of savings. In addition, the tax benefits attractive to a higher income family do not offer as much benefit to a family with lower tax liability. Link to comment Share on other sites More sharing options...
nonniey Posted January 25, 2015 Author Share Posted January 25, 2015 Wealthy people have more money to put in their 527s than less wealthy people? I'm shocked! Do you have a link to the GAO report? Open the PDF File and look on page 16 in 2012 the medium income of the contributors of these types of accounts was $142,200. http://www.gao.gov/products/GAO-13-64 Link to comment Share on other sites More sharing options...
PeterMP Posted January 25, 2015 Share Posted January 25, 2015 Oh and here's more: "And, in part because high earners typically owe higher taxes, the wealthy reaped large tax breaks from using 529s. In 2012, the GAO found that Americans who made less than $100,000 withdrew a median $7,491 from their 529s, saving just $561 on their taxes. But Americans who earned more than $150,000 withdrew a median $18,039, saving $3,132 in taxes. In place of the tax break at withdrawal, Obama wants to expand the American Opportunity Tax Credit, which is currently phased out for families earning more than $180,000 a year." http://time.com/money/3676300/529-taxes-obama-state-of-the-union/ The money in the accounts heavily favors the wealthy, and they get more savings from it (which isn't really surprising). vs. we can shift the money to a tax credit that phases out at over $180,000. Link to comment Share on other sites More sharing options...
twa Posted January 25, 2015 Share Posted January 25, 2015 25 times the median financial assets of those without isn't saying much Hersh Link to comment Share on other sites More sharing options...
PeterMP Posted January 25, 2015 Share Posted January 25, 2015 Open the PDF File and look on page 16 in 2012 the medium income of the contributors of these types of accounts was $142,200. http://www.gao.gov/products/GAO-13-64 Right and how much did they contribute as compared to others? If I contribute $200 and somebody else contributes $2000, it is going to make a big difference. And when you have to look at how much was actually saved on taxes, it gets even worse (as demonstrated in post above). A phased out tax credit is a much better deal for the middle class. Link to comment Share on other sites More sharing options...
nonniey Posted January 25, 2015 Author Share Posted January 25, 2015 Here is the GAO report. Oh now the term is wealthier? So your conceding it is not a proposal to tax the rich? Just the wealthier portion of the middle class? Link to comment Share on other sites More sharing options...
PeterMP Posted January 25, 2015 Share Posted January 25, 2015 That's about as simplifying as taking a piece of hay out of a haystack. And we don't even know what it would cost to remove that piece of hay. That in no way simplifies the tax code. Stuff changes slightly every year in the tax codes. I guess if that makes you sleep better on the topic. The longest journey starts with a single step. Link to comment Share on other sites More sharing options...
nonniey Posted January 25, 2015 Author Share Posted January 25, 2015 Right and how much did they contribute as compared to others? If I contribute $200 and somebody else contributes $2000, it is going to make a big difference. And when you have to look at how much was actually saved on taxes, it gets even worse (as demonstrated in post above). A phased out tax credit is a much better deal for the middle class. Well yeah if you contribute the maximum amount you'll get the maximum benefit. But again those contributing the 2K are still middle class this isn't the rich we're talking about here but that is what the President is trying to describe it as. Link to comment Share on other sites More sharing options...
PeterMP Posted January 25, 2015 Share Posted January 25, 2015 Oh now the term is wealthier? So your conceding it is not a proposal to tax the rich? Just the wealthier portion of the middle class? 1. The accounts are more evenly distributed than the money in the accounts (that's Obama's claim at least and nobody is giving any evidence that it is wrong), which wouldn't be surprising. The accounts are more evenly distributed, but the money in them favors the rich because the rich put more money in. 2. The rich get more of a benefit from even equal dollar contributions because of the nature of the tax code, and the contributions aren't (likely) equal. It is primarily a tax break for the rich. Unlike a phased out tax credit (depending on where you phase out obviously). Link to comment Share on other sites More sharing options...
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