You own a 5M IRA. Who owns your money? You and Uncle Sam. If you RMD 5M at age 72, the RMD is $232,260. At 82 the RMD is $397,000. Let’s say SS at 72 is 57,700 of which 85% is taxable your net taxable income is $281,305 and your tax bill present day code is $49,708. So at 72 Uncle Sam owns 17.6% of your money. At 82 SS would be an inflation adjusted $67,603 so your net taxable is $454,463 and your tax bill is $104,631. Uncle Sam owns 23% of your money.
I’ve seen articles that claim overpaying taxes are a free loan to Uncle Sam, and somehow underpaying is a free loan from Uncle Sam to you, BUT who owns your money? Your money is jointly owned, PERIOD. Nobody “loans” anything to anyone. Your obligations are your obligations. Pretending your money is all yours is silly. If you underpay you will get fined. If you overpay you will get fined if you don’t pay on time and quarterly. I get fined every year because I pay as I go. I overpay slightly my initial major portions of my Roth conversions in the first week of Jan and pay the taxes by Apr 15, and then I overpay my final portion to push me to the top of the bracket in Dec once I know what my interest and distributions look like. Since I don’t pay quarterly I get a small fine every year which is fine by me since I like the ability to NOT do a Roth conversion if I choose like I did last year. Last year I sold some stocks before the crash and wanted to control my cap gains and bracket creep. I decided 2020 and probably 2021 (depending on the election outcome) would be the lowest cap gains I would ever see in my lifetime and since my money is owned by Uncle Sam AND me I wanted to give him as small a share as I could. Right now except for my BTC gains me and Sam are pretty square. I have less “money” but Sam doesn’t own much and going forward once Roth conversions are completed he will own even less.
My bet is in the future, as the body politic shamelessly and increasingly soaks the rich to redistribute wealth, I will emerge as already done been soaked, having paid my fair share at basement rates and moderately vaccinated from further soaking. My yearly taxable income stream will be dead center 2nd bracket middle class, which is a relatively protected class. Bracket 2 has a LOT of voters. Bracket 3 is when the soaking commences. It has far fewer voters.
Debt is majorly deflationary. The demographics are majorly deflationary. The long term GDP is deflationary. Unemployment is deflationary. If you count work force dropouts unemployment is at depression levels. Technology is deflationary. Yes I know bread and gas are up but the basket of goods and services is not, and the basket is the yardstick not a single item. In my opinion the government can’t tolerate inflation, even though they jawbone “running hot” because the debt needs to be refinanced every year, and inflation will force bond yields higher and the entire tax base will go to paying the interest on the debt. Paul Volker died in 2019 and as far as I know is still dead. BTC right now is anti-inflationary and anti-deflationary because it’s rising and tends to be uncorrelated or poorly correlated with anything. Interesting times.