Tax Fairness and the Small Business Owner
I think discussions about tax fairness are fine. As practical, we should share the burdens equally for living in this great country. But in terms of whether wealthier Americans are paying their fair share, to me, there's simply no argument to be had.
What's also interesting about the two scenarios above is what they suggest about the appropriate risk profile for each family. Specifically, the guaranteed pension payments of the city worker, and their attendant value of $1.6 million actually puts their "savings" well ahead of the business owner's savings.
When investing each should take a different path toward a secure retirement. Accordingly, it's the city worker who should be the more aggressive, risk-taking investor. The risk of the city worker is a pension that will not keep up with the cost of living, and inflation will chisel away his purchasing power over time.
The city worker's cash flow is fixed and therefore should be matched with an equity portfolio that can grow over time and keep up with inflation. (See my article on
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