[pct-l] Re: Isn't Hiking Free

[pctl at ilja.ws (Ilja Friedel)]

Hi Ann,

On Sun, 12 Dec 2004, Aloha! Ann wrote:

> 2001 = no income outside of any investments; 2003 = well, I 
> won't repeat what I actually said when my W2 arrived and the taxes were 
> completed.  Let's just go with... it hurt.  It really hurt.

You touched an interesting point. Tax law treats people with highly 
variable income over the years (say thru-hikers) much harsher than people 
with constant income. Let us ignore inflation etc. for a moment. If two 
people where to make one fat million dollares over their lifetime: One of 
them in 25k pieces over 40 years - the other person 50k a year for 20 
years (lets assume the latter person where thru-hiking in odd years and 
doing double jobs in even). Because of the progressive tax system the 
second person would have made less money after taxes than the first. Lets 
call this unfairness the "thru-hiker penalty".

What should the thru-hiker do to not be taxed so unfairly? The main idea 
is to smoothen out the income over the tax years. One way of doing so is 
to thru-hike trails on the southern hemisphere. Their summer season starts 
in October and lasts thru April. Now how do we relocate the PCT to Chile? 
;-)

Another idea (I have no particular knowledge about tax law) would be to 
use tax defered accounts. (Something like IRA, 401k etc.) In the fat years 
one would have to massively invest into these and avoid being taxed at the 
highest bracket. Should one draw from them during thru-hiking years? There 
usually is a 10 percent penalty. So I don't know.

But an interesting idea would be as follows: most people here agree that 
thru-hiking is relatively inexpensive on the trail (on the order of USD 
500 - 700 a month). Other fun activities would be traveling around the 
world and hiking Siberia, the Himalayan or Australia. (I have friends that 
traveled around the world on a USD 600 - 1000 per month budget - scuffy 
student/hiker standard). If one where willing to explore the world at age 
50, say for 5 years, the tax defered account could grow quit a bit - 
without even contributing during this time. Early retirement at age 55? 
(After having traveled the world for half a decade!)


Ilja.