Tax Season: Why I loathe paying taxes since moving to CA from the UK

>We need the basics that deliver true equality, as I experienced growing up in the UK: free healthcare, good public schools, and good public transport. Maybe even ban the private options like they banned

To be fair.

You picked California. Chicago , NYC, DC and I'm sure one or two other American cities have functioning public transportation.

The other two issues will never ever be fixed. Tbh if your quality of life was so much better in the UK why'd give that up ?

The upper class doesn't work - it owns. Maybe some top executives of global corporations can be considered upper class, but usually most of their wealth comes from ownership of stock.

Having lived in SF, London, Berlin, and now DC, I can tell you that DC's is totally subpar in comparison to any I encountered in Europe. Not only in the year that I've been there have there been multiple shootings on the subway in that time but I can't remember a single instance where I didn't see someone hopping the turnstile and the trains are quite slow (in terms of number of trains per hour).

I have sympathy with the premise but unfortunately quotes like this completely undermine the reliability of the analysis:

World-class public transport, never needed a car in London

The idea that UK public transport is world class is absurd.

The author is doing extreme cherry picking by referring to the entirely unrepresentative London transport infrastructure and service.

Try living in a rural area or many urban areas, especially in the north, and talk about "world class" public transport to people there.

> And there are penalties for withdrawing before 59.5years, which I would call the "retirement age" on these plans.

Sort of, but in practice not really if you're smart about it and plan a bit in advance.

If you want to retire early and access 401(k) or traditional IRA funds, you can do so without incurring additional taxes or penalties. The strategy is called a "Roth conversion ladder". It takes advantage of the fact that you can always withdraw Roth principal (not investment returns) before any retirement age penalty-free (as long as those funds have been in the Roth for at least five years).

The general outline is that you roll over some of your 401(k) or IRA funds into a Roth IRA every year. This causes those funds to be taxed as regular income tax, but your income is almost certainly going to be dramatically lower than during your earning years, putting you in a much lower tax bracket. This entire amount that was rolled over is now considered principal, and in five years you can use it penalty-free per the Roth rules. Every year you roll over what you expect to need in five years. Once you bridge that first five years (perhaps with preexisting Roth funds), you now have a recurring source of income through your Roth.

Yes, this is some additional complication and requires some planning. But it's not particularly onerous. GP is right that you're likely making a pretty big mistake, paying 40%–50% tax rates (on the marginal top end of your income) in order to avoid some restrictions that are—in most cases—pretty easily bypassed. That's not to say there aren't some very legitimate reasons for keeping money in accounts that don't come with restrictions, but paying 40%—50% in taxes for that privilege makes those situations comparatively rare.

I will absolutely agree that the fact that you need to know these sorts of "tricks" is one of many indefensible parts of our retirement system. And of course, there's always the risk of the rules changing out from under you. But cases where that actually happens in a way that causes significant impact are uncommon in practice.