Your Biggest Investment Enemy - The Payroll Tax

Many investors mistakenly (and understandably) believe that their biggest enemy is the capital gains tax. They are wrong. The single biggest threat for those who want to move from the lower or middle class to the “capitalist” class, as some academics have called it, is the payroll tax, which consists of Social Security and Medicare. (For those who are unfamiliar with the term, the capitalist class refers to those who generate income from assets they own, rather than their labor.) As we’ll discuss in this article, the payroll tax effectively serves as a barrier that makes it nearly impossible for the average American to accumulate wealth, especially if he or she is self-employed and forced to pay the entire 15.3% themselves. Continue reading ...