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Won't this push a lot of highly payed professionals into early retirement? Doctors, lawyers, and managers, at the point in their careers where they are the most

Won't this push a lot of highly payed professionals into early retirement? Doctors, lawyers, and managers, at the point in their careers where they are the most experienced and capable, will likely decide in meaningful numbers it is no longer worth putting in the hours if they only get to keep 27% of what they earned.

frandroid 11y ago
How many of these people make over $10M a year? Also, even if they do, they wouldn't be taxes that high on the first $10M.
vnchr 11y ago
If so, that might improve the job prospects of many up and comers in those fields. I think your point is clear that there's potential for loss because of the retiring talent, but that can incentivize investing in talent down the pipeline.
- ameister14 11y ago
  There aren't enough qualified doctors for our population as it is.
vorotato 11y ago
Good, more room for the next generation.
- rglullis 11y ago
  I don't know what is worse: the ageism you are showing or the mentality of an 18th century economist.
- pluckytree 11y ago
  To learn from whom?
  - toomuchtodo 11y ago
    I can tell you that teachers don't make six figures and above.
- ctdonath 11y ago
  Why would the next generation want to take up that room? Would you take up a career where despite long & expensive education, long hours, hard work, and lives-in-your-hands responsibility, you kept just 27% of your income? would you put in a million dollars of effort to net a quarter of that in return?
  - Spooky23 11y ago
    27% of X, where X>0, is more than 100% of 0.
  - delazeur 11y ago
    That's not how tax brackets work. You would "only" keep 27% of your income over $10MM, but you would keep a much higher percentage of that first $10MM. > would you put in a million dollars of effort to net a quarter of that in return? Even if I was paying 27% on the first $10MM, putting in $1MM worth of effort would get me a return of 170% per year.
  - dragonwriter 11y ago
    > Why would the next generation want to take up that room? Because they want the things money can buy. > Would you take up a career where despite long & expensive education, long hours, hard work, and lives-in-your-hands responsibility, you kept just 27% of your income? Maybe, maybe not, but, anyway, that's not how marginal rates in a progressive tax system work. Even if the marginal rate that kicks in at $10 million is 73%, that means you only keep 27% of the amount after $10 million, and some greater amount of the part below $10 million. Obviously, an increase in the top marginal tax rate decreases the incentive to work to increase income once you've reached the annual income level at which the higher tax rate applies, but doesn't it really hurt anyone that people already making at least $10 million/year prioritize making additional income less over other priorities?
    - ctdonath 11y ago
      Ronald Regan, as a movie star, regularly didn't make movies precisely because the progressive tax system would head into confiscatory levels making the effort worthless to him. Such rates denied both the public at large from products they wanted, and the government tax revenue. I don't want my world to actively discourage the talented from producing. I want to encourage people to make insane amounts of money, because that is largely the result of far-and-above productivity which everyone else benefits from. Jobs are created, desirable products/services are generated at affordable costs, money is invested (even banked "cash" gets loaned, and extravagant luxuries create markets), and the general standard of living is raised. The cost of discouraging effort is never included in these "soak the rich, redistribute the wealth" equations.
toomuchtodo 11y ago
Only 27%. ONLY! Did you know the UK has a 40% income tax over £42,385? And plenty of doctors, solicitors (lawyers), and managers continue to work for income. https://www.gov.uk/income-tax-rates/current-rates-and-allowances https://www.gov.uk/income-tax-rates/current-rates-and-allowa...
- tyingq 11y ago
  The 27% is what they keep, not the tax rate. The comparison would be 73% to your 40%.
  - toomuchtodo 11y ago
    Thanks for clarifying that. In that case, people should feel free to not work any additional time if that additional income that intrudes into that highest marginal tax rate doesn't provide enough incentive for them after tax.
- nightski 11y ago
  27% is what they keep, I think he was implying a 73% income tax rate. What are you trying to say here?
  - toomuchtodo 11y ago
    > What are you trying to say here? Taxes are too low in the US, the lowest they've been in ~100 years. They must go up, and if people in the highest income brackets make less, so be it. You're still making 7-8 figures/year. At some point, enough is enough. Who is to say what enough is? Society, the system in place enabling you to earn that money in the first place. My apologies I wasn't getting that point across.
dangoor 11y ago
People don't always work solely for the money. Also, that top tax rate is only in income above $10 million. The money below that threshold is taxed at lower rates. So, they would be keeping more than 27% of their total income
MuEta 11y ago
At least for doctors, I would think that the average annual income is somewhere around $300,000-400,000 (and that may be too high). This group would, all-in, be taxed somewhere between 50-60% including medicare, Social Security, etc., no where near the 73% imposed on any dollar made past $10,000,000. There may be a handful of doctors in the world pushing the $10,000,000 barrier. I assume that the landscape is similar for lawyers and managers, and that people tend to focus on those making huge money to generalize the whole field.
enraged_camel 11y ago
You are assuming that those professionals choose to remain a part of the workforce due to their high income.
- pc86 11y ago
  No he's not. He's assuming that losing a large percentage of that income would be enough impetus to leave it.
  - dragonwriter 11y ago
    Those are equivalent assumptions, so there doesn't seem to actually be an argument here.
    - pc86 11y ago
      They're not at all equivalent. "I want to retire but I'm not going to because I am not willing to lower my standard of living to match what I will earn in retirement." vs. "My effective tax rate has increased and I can no longer afford my standard of living. I might as well retire now instead of in 5 years."
maxerickson 11y ago
They get to keep a larger fraction of the first $10 million of income. I wonder how many people earning more than ~$1 million per year really care about the exact level compensation they get (there are an awful lot of people that reduce their working time well before that level of income).
msbarnett 11y ago
> Doctors, lawyers, and managers, at the point in their careers where they are the most experienced and capable, will likely decide in meaningful numbers it is no longer worth putting in the hours if they only get to keep 27% of what they earned. Only 27% of what they earned above $10 million. They keep considerably more of the first $10 million they earn. Did the entire nation sleep through the day they explained how marginal tax rates work, or something?
dragonwriter 11y ago
> Won't this push a lot of highly payed professionals into early retirement? Probably not. > Doctors, lawyers, and managers, at the point in their careers where they are the most experienced and capable, will likely decide in meaningful numbers it is no longer worth putting in the hours if they only get to keep 27% of what they earned. This rate cuts in for income over $10 million/year. That's on the order of 5 times the cutoff for the top 0.1%, and the top 0.1% is on the order of 150k tax payers in a nation of 300+ million people. Even if the whole group decided to stop doing work that would subject them to the new rate (which is different than "early retirement" -- more on that next), we aren't talking about giant numbers. And the way marginal taxes work, if they are okay with putting in effort as long as they are getting as good as they do under the current tax system but unwilling to do so at the new rate that would kick in at $10 million, then they wouldn't stop working entirely, they'd just stop doing the extra work to go over $10 million a year. Which probably isn't that much of the work they are already doing in many cases, and, in any case, so what? It opens up more opportunities -- even if you assume no one is willing to do work that would only return what income over the new top marginal rate would return -- for people who are currently making less than the point at which that new top rate kicks in. So, the main effect would be the super rich having somewhat more leisure time (or making decisions less weighted by maximizing financial returns and more based on other factors, which may not always mean less total working time, but better working conditions or more enjoyable work) and everyone else having more income-earning opportunities available. Not exactly the end of the world.
- ameister14 11y ago
  Yes, and the real rate for those making above 500k is less than 10% lower. So...35% of what they earn.

frandroid 11y ago

How many of these people make over $10M a year? Also, even if they do, they wouldn't be taxes that high on the first $10M.

vnchr 11y ago

If so, that might improve the job prospects of many up and comers in those fields. I think your point is clear that there's potential for loss because of the retiring talent, but that can incentivize investing in talent down the pipeline.

ameister14 11y ago
There aren't enough qualified doctors for our population as it is.

vorotato 11y ago

Good, more room for the next generation.

rglullis 11y ago
I don't know what is worse: the ageism you are showing or the mentality of an 18th century economist.
pluckytree 11y ago
To learn from whom?
- toomuchtodo 11y ago
  I can tell you that teachers don't make six figures and above.
ctdonath 11y ago
Why would the next generation want to take up that room? Would you take up a career where despite long & expensive education, long hours, hard work, and lives-in-your-hands responsibility, you kept just 27% of your income? would you put in a million dollars of effort to net a quarter of that in return?
- Spooky23 11y ago
  27% of X, where X>0, is more than 100% of 0.
- delazeur 11y ago
  That's not how tax brackets work. You would "only" keep 27% of your income over $10MM, but you would keep a much higher percentage of that first $10MM. > would you put in a million dollars of effort to net a quarter of that in return? Even if I was paying 27% on the first $10MM, putting in $1MM worth of effort would get me a return of 170% per year.
- dragonwriter 11y ago
  > Why would the next generation want to take up that room? Because they want the things money can buy. > Would you take up a career where despite long & expensive education, long hours, hard work, and lives-in-your-hands responsibility, you kept just 27% of your income? Maybe, maybe not, but, anyway, that's not how marginal rates in a progressive tax system work. Even if the marginal rate that kicks in at $10 million is 73%, that means you only keep 27% of the amount after $10 million, and some greater amount of the part below $10 million. Obviously, an increase in the top marginal tax rate decreases the incentive to work to increase income once you've reached the annual income level at which the higher tax rate applies, but doesn't it really hurt anyone that people already making at least $10 million/year prioritize making additional income less over other priorities?
  - ctdonath 11y ago
    Ronald Regan, as a movie star, regularly didn't make movies precisely because the progressive tax system would head into confiscatory levels making the effort worthless to him. Such rates denied both the public at large from products they wanted, and the government tax revenue. I don't want my world to actively discourage the talented from producing. I want to encourage people to make insane amounts of money, because that is largely the result of far-and-above productivity which everyone else benefits from. Jobs are created, desirable products/services are generated at affordable costs, money is invested (even banked "cash" gets loaned, and extravagant luxuries create markets), and the general standard of living is raised. The cost of discouraging effort is never included in these "soak the rich, redistribute the wealth" equations.

toomuchtodo 11y ago

Only 27%. ONLY! Did you know the UK has a 40% income tax over £42,385? And plenty of doctors, solicitors (lawyers), and managers continue to work for income. https://www.gov.uk/income-tax-rates/current-rates-and-allowances https://www.gov.uk/income-tax-rates/current-rates-and-allowa...

tyingq 11y ago
The 27% is what they keep, not the tax rate. The comparison would be 73% to your 40%.
- toomuchtodo 11y ago
  Thanks for clarifying that. In that case, people should feel free to not work any additional time if that additional income that intrudes into that highest marginal tax rate doesn't provide enough incentive for them after tax.
nightski 11y ago
27% is what they keep, I think he was implying a 73% income tax rate. What are you trying to say here?
- toomuchtodo 11y ago
  > What are you trying to say here? Taxes are too low in the US, the lowest they've been in ~100 years. They must go up, and if people in the highest income brackets make less, so be it. You're still making 7-8 figures/year. At some point, enough is enough. Who is to say what enough is? Society, the system in place enabling you to earn that money in the first place. My apologies I wasn't getting that point across.

dangoor 11y ago

People don't always work solely for the money. Also, that top tax rate is only in income above $10 million. The money below that threshold is taxed at lower rates. So, they would be keeping more than 27% of their total income

MuEta 11y ago

At least for doctors, I would think that the average annual income is somewhere around $300,000-400,000 (and that may be too high). This group would, all-in, be taxed somewhere between 50-60% including medicare, Social Security, etc., no where near the 73% imposed on any dollar made past $10,000,000. There may be a handful of doctors in the world pushing the $10,000,000 barrier. I assume that the landscape is similar for lawyers and managers, and that people tend to focus on those making huge money to generalize the whole field.

enraged_camel 11y ago

You are assuming that those professionals choose to remain a part of the workforce due to their high income.

pc86 11y ago
No he's not. He's assuming that losing a large percentage of that income would be enough impetus to leave it.
- dragonwriter 11y ago
  Those are equivalent assumptions, so there doesn't seem to actually be an argument here.
  - pc86 11y ago
    They're not at all equivalent. "I want to retire but I'm not going to because I am not willing to lower my standard of living to match what I will earn in retirement." vs. "My effective tax rate has increased and I can no longer afford my standard of living. I might as well retire now instead of in 5 years."

maxerickson 11y ago

They get to keep a larger fraction of the first $10 million of income. I wonder how many people earning more than ~$1 million per year really care about the exact level compensation they get (there are an awful lot of people that reduce their working time well before that level of income).

msbarnett 11y ago

> Doctors, lawyers, and managers, at the point in their careers where they are the most experienced and capable, will likely decide in meaningful numbers it is no longer worth putting in the hours if they only get to keep 27% of what they earned. Only 27% of what they earned above $10 million. They keep considerably more of the first $10 million they earn. Did the entire nation sleep through the day they explained how marginal tax rates work, or something?

dragonwriter 11y ago

> Won't this push a lot of highly payed professionals into early retirement? Probably not. > Doctors, lawyers, and managers, at the point in their careers where they are the most experienced and capable, will likely decide in meaningful numbers it is no longer worth putting in the hours if they only get to keep 27% of what they earned. This rate cuts in for income over $10 million/year. That's on the order of 5 times the cutoff for the top 0.1%, and the top 0.1% is on the order of 150k tax payers in a nation of 300+ million people. Even if the whole group decided to stop doing work that would subject them to the new rate (which is different than "early retirement" -- more on that next), we aren't talking about giant numbers. And the way marginal taxes work, if they are okay with putting in effort as long as they are getting as good as they do under the current tax system but unwilling to do so at the new rate that would kick in at $10 million, then they wouldn't stop working entirely, they'd just stop doing the extra work to go over $10 million a year. Which probably isn't that much of the work they are already doing in many cases, and, in any case, so what? It opens up more opportunities -- even if you assume no one is willing to do work that would only return what income over the new top marginal rate would return -- for people who are currently making less than the point at which that new top rate kicks in. So, the main effect would be the super rich having somewhat more leisure time (or making decisions less weighted by maximizing financial returns and more based on other factors, which may not always mean less total working time, but better working conditions or more enjoyable work) and everyone else having more income-earning opportunities available. Not exactly the end of the world.

ameister14 11y ago
Yes, and the real rate for those making above 500k is less than 10% lower. So...35% of what they earn.