Thursday, August 25, 2022

A Lot Of "Middle Class Tax Breaks" Benefit The Rich, Mostly

Quick post, but one thing lost in the student debt reduction is that Rich Dad who sent young Matty to Harvard quite likely was smart and saved, tax free, a lot of money for that tuition. $50,000 tax break on $200,000 (made up numbers, but you get the point).

Actual middle class people made save a bit in 529 college fund plans, but they are unlikely to save the full tuition amount, they still are looking for financial aid and the 529 account can (somewhat) count against in the FAFSA formulas.

Also middle class people frequently need to tap into these types of tax free accounts, because it's most of the savings they have, at a penalty.

Whether these programs are good or bad additions, given the way everything works, is not my point, but the point is that rich people can benefit from them fully and middle classish people...not all that much.

Rich and poor alike can save 5 figures annually tax free!