3 ms·

Ugh... Since Forbes can probably make this argument based only on the facts, why did they have to invent a "79% tax rate" for this person? It's simply not tru

by idm 17y ago

Ugh... Since Forbes can probably make this argument based only on the facts, why did they have to invent a "79% tax rate" for this person? It's simply not true. Paying college tuition is not tax, and student financial aid usually does not take the form of a tax rebate. Therefore, including this in their "79% bogeyman" is inaccurate. Furthermore, paying your home mortgage is not a tax, and relief on your mortgages may or may not take the form of a tax rebate. Again, it is inaccurate to lump this into the so-called 79% tax rate. Forbes made this even worse by applying these expenses to the top 60,000 of the person's 120,000 income, and calling the entire thing the "marginal tax rate." By my calculations, we're talking about a 27.5% marginal tax rate on the top 60k of her income, and then whatever the tax rate would be on her lower 60k of income. I'm going to estimate the tax rate is something like 20%, which is far less horrifying than 79%. It's still true that income differences will affect financial aid and mortgage payments, so Forbes should point that out, but it's totally irresponsible to call this a 79% tax rate.

marvin 17y ago
Semantics. The effect of the incentive rules quoted in the article is that by taking the higher-paying job, the woman will end up with 20% more money while working twice as hard. I see the same thing in Norway: If you are able to hold a great-paying job (equivalent to 200,000 USD a year, for instance, typical for a hard-working oil industry consultant), the marginal tax greatly reduces the value you get from your extra effort. (Typical numbers here are 35% tax on everything up to 50000 USD, increasing to 55% for everything above 130000 USD). Given that you invariably work your ass off in jobs like these, the prospect doesn't seem very tempting. Why work twice as hard when you only get 50% more money? You can't even work hard one year and slack the next, because it doesn't pay. The problem is that you want as many people as possible to do the best work they can do. The effect of tax/incentive rules such as these is that the government is telling people capable of holding high-paying jobs to start slacking. This is bad on many levels.
- skorgu 17y ago
  > ... 20% more money while working twice as hard. The idea that there's such a correlation between pre-tax income and expended effort is...profoundly difficult to accept without substantial evidence.
- gte910h 17y ago
  > Why work twice as hard when you only get 50% more money 1. Salary doesn't correlate to "hard work". It correlates to "bargaining position vs work undesirability". It means the responsibilities will either need to be separated into more jobs, or they'll need to compensate more if they can't decrease the job shittyness. 2. If you bring home 80k about 30k of that goes straight to living expenses. If you bring home 120k, only about 35k of that needs to go to living expenses, the rest is all disposable income. So you're working for about 80% more disposable income, not a flat 50% more money. The upper middle class has an issue realizing what the term "luxury" means. 3. While there are plenty of individuals who both have the choice between a 120k and 60k job and choose the 60k job for the better quality of life and subsidies they'll get, there is yet another subsection of the population who'll choose the 120k a year job for the somewhat extra disposable income. This is not a problem, companies aren't struggling to fill 120k jobs that much I'm pretty sure.

by idm 17y ago

marvin 17y ago

Semantics. The effect of the incentive rules quoted in the article is that by taking the higher-paying job, the woman will end up with 20% more money while working twice as hard. I see the same thing in Norway: If you are able to hold a great-paying job (equivalent to 200,000 USD a year, for instance, typical for a hard-working oil industry consultant), the marginal tax greatly reduces the value you get from your extra effort. (Typical numbers here are 35% tax on everything up to 50000 USD, increasing to 55% for everything above 130000 USD). Given that you invariably work your ass off in jobs like these, the prospect doesn't seem very tempting. Why work twice as hard when you only get 50% more money? You can't even work hard one year and slack the next, because it doesn't pay. The problem is that you want as many people as possible to do the best work they can do. The effect of tax/incentive rules such as these is that the government is telling people capable of holding high-paying jobs to start slacking. This is bad on many levels.

skorgu 17y ago
> ... 20% more money while working twice as hard. The idea that there's such a correlation between pre-tax income and expended effort is...profoundly difficult to accept without substantial evidence.
gte910h 17y ago
> Why work twice as hard when you only get 50% more money 1. Salary doesn't correlate to "hard work". It correlates to "bargaining position vs work undesirability". It means the responsibilities will either need to be separated into more jobs, or they'll need to compensate more if they can't decrease the job shittyness. 2. If you bring home 80k about 30k of that goes straight to living expenses. If you bring home 120k, only about 35k of that needs to go to living expenses, the rest is all disposable income. So you're working for about 80% more disposable income, not a flat 50% more money. The upper middle class has an issue realizing what the term "luxury" means. 3. While there are plenty of individuals who both have the choice between a 120k and 60k job and choose the 60k job for the better quality of life and subsidies they'll get, there is yet another subsection of the population who'll choose the 120k a year job for the somewhat extra disposable income. This is not a problem, companies aren't struggling to fill 120k jobs that much I'm pretty sure.