The $357,000 Tax Bill: Your Personal Share of the US Debt

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Welcome back to the One of a Kind Financial Show Daily. I'm Mike Milligan, Certified Financial Planner. This is day 2 of our 5-part U.S. Debt Clock series based on the upcoming book, The Partner You Unknowingly Chose. Yesterday, we talked about the clock itself and why you need to be looking at it. Today we're going to zoom in to one of the most important numbers on that site, your share. Pull up usdebtclock.org. Top left corner, big red numbers. That's the total outstanding gross national debt. Right now that number is north of $39 trillion and climbing. It grows by $74,000 every second. Every single second. But here's the thing, the raw number, as massive as it is, doesn't mean much unless you personalize it. And that's exactly what the Debt Clock does. It breaks it down 2 ways. First, debt per citizen. That takes the total debt and divides it by the entire U.S. population, about 343 million people. That comes out to roughly $113,000 for every man, woman, and child— newborns, retirees, those in nursing homes, those working, those that are not. Second, and this is one that should get your attention, debt per taxpayer. That divides the debt by the roughly 109 million Americans who actually file and pay federal income taxes. That number, it's about $357,000 per taxpayer. Now think about the gap between those 2 numbers. $113,000 per citizen versus $357,000 per taxpayer. That's more than a 3-to-1 ratio. And that gap tells a story. The tax burden falls on a much smaller group than most people realize. Only about 109 million Americans out of 343 million actually pay federal income tax. That's roughly 32% of the population carrying the load for everyone, and it gets more concentrated from there. The top 1% of earners pay about 40% of all federal income taxes. The top 10% pay 72%. So when you hear politicians talk about the national debt in abstract terms, know this: the bill for that debt is going to land on the doorsteps Of the people who earn, save, and invest. That's probably you. And if you've got money sitting in traditional 401 or IRAs, the government already has a claim on part of it. They just don't— they just haven't sent you the invoice yet, either in the form of required minimum distributions or something new that may come in the future. As I say in the book, you have a silent business partner. And that partner's share of your retirement savings will be determined by future tax policy, which will be driven by the very numbers on that debt clock. Here's what really scares me. It's the speed or the acceleration. In 1989, when Seymour Durst built his clock, the debt was $2.7 trillion. It took 220 years from the founding of the republic to accumulate the first $10 trillion. But just 6 years to add the most recent $10 trillion. We're adding roughly $1 trillion every 100 days now. The Congressional Budget Office, or CBO, projects the debt will reach $64 trillion by 2036. Ray Dalio, the guy who built the world's largest hedge fund, projects $55 to $60 trillion within 10 years. That would be about $425,000 of debt per American family. This isn't a slow leak. This is acceleration. And it's why waiting to plan is the most expensive decision you can make. So what do you do with this? 3 things. One, go to US Debt Clock and look at the debt per taxpayer number. That's your share.

Internalize that.

2, understand that this debt has to be serviced. Interest alone is nearly $1 trillion a year. It has surpassed defense spending. That money has to come from somewhere, and somewhere is tax revenue— your tax revenue. And then number 3, start a conversation with a financial professional about tax planning, not tax preparation. That's looking backward. Tax planning is looking forward. It's about positioning your money so that when tax rates inevitably rise to address this debt, You've already moved your assets to where the government can't touch them. That's why 5— that's what my 5 Pillars framework is about. The one-of-a-kind financial plan is about tax planning first, then retirement income, investments, long-term care, and legacy, in that order, because taxes are the single biggest variable you can control. That's day 2. Tomorrow, we're going to tackle the scariest number on the entire debt clock. unfunded liabilities, the $193 trillion that nobody in Washington wants to talk about. Make sure you're subscribed to @IdeasByMike on YouTube and @MoneyMikeUnmuted. And check out the book, The Partner You Unknowingly Chose, when it hits Amazon. We'll see you tomorrow. This has been the One of a Kind Financial Show Daily with your host, Mike Milligan. Uh, Ideas by Mike, doing business as One Oak Financial, is an unaffiliated entity of Advisory Alpha LLC. Mike is an investment advisory rep at Advisory Alpha LLC. All content on this channel is for informational and educational purposes only. To speak with a financial representative, go to www.oneoakfinancial.com. That's the number oneoakfinancial.com. Or to connect with Mike for a speaking engagement, a podcast guest appearance, Or to help educate or coach you, please go to MikeMilligan.com.

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