4 ms·

You're both right. Research shows that more money doesn't make you happier - after around 80k a year in family income. Before 80k a year (depending on location,

by cm2012 8y ago

You're both right. Research shows that more money doesn't make you happier - after around 80k a year in family income. Before 80k a year (depending on location, etc, I think that was the average for the USA), every dollar absolutely makes you happier with a linear line graph. This is also a great argument for more marginal taxation.

yyyymmddhhmmss 8y ago
If 80k/yr is considered poor, then sure, but that’s absurd. She was right. He was wrong.
- cm2012 8y ago
  Totally agree, I should have phrased it better.
zaroth 8y ago
That’s funny, because when I read “every dollar absolutely makes you happier with a linear line graph” I immediately thought of marginal tax rates. The fact is that marginal effective tax rate approaches 100% at various points on the first $80k of household income. If you are a family of 4 and require any health care, the first $80k is practically treading water. This is because you lose out on $500/mo in food stamps, at least $2,000/mo in healthcare subsidies, and pay over $17,000 in total taxes. That’s not including various other programs you might qualify for as a family of 4 with zero income versus programs you no longer qualify for after earning $80,000. On top of that, it actually costs a lot of money to go out and earn that $80,000 (direct, indirect, and opportunity costs) which eat into the very little money that actually remains after taxes and disappearing subsidies. Here’s a CBO analysis on marginal effective tax rates for a single parent with a single child which shows gross income vs effective income — see how it flattens out? [1] The marginal effective tax rate is higher the more children you have. This analysis does attempt to take cost-sharing subsidies for health insurance into account, although it’s not clear what level of health care utilization they are modeling. The most fascinating thing about the curve on slide 6 is how “After-Tax Income” starts at about $19k (the value of the govt subsidies) and by the time the parent is earning $60,000 has only increased to about $40k (66% effective tax rate), and there is a point on the curve where slope is negative — earning more leaves you worse off! [1] - https://www.cbo.gov/system/files/2018-06/54093-taxrates.pdf https://www.cbo.gov/system/files/2018-06/54093-taxrates.pdf
roel_v 8y ago
Most of that research has been shown to be bunk.

by cm2012 8y ago

yyyymmddhhmmss 8y ago

If 80k/yr is considered poor, then sure, but that’s absurd. She was right. He was wrong.

cm2012 8y ago
Totally agree, I should have phrased it better.

zaroth 8y ago

That’s funny, because when I read “every dollar absolutely makes you happier with a linear line graph” I immediately thought of marginal tax rates. The fact is that marginal effective tax rate approaches 100% at various points on the first $80k of household income. If you are a family of 4 and require any health care, the first $80k is practically treading water. This is because you lose out on $500/mo in food stamps, at least $2,000/mo in healthcare subsidies, and pay over $17,000 in total taxes. That’s not including various other programs you might qualify for as a family of 4 with zero income versus programs you no longer qualify for after earning $80,000. On top of that, it actually costs a lot of money to go out and earn that $80,000 (direct, indirect, and opportunity costs) which eat into the very little money that actually remains after taxes and disappearing subsidies. Here’s a CBO analysis on marginal effective tax rates for a single parent with a single child which shows gross income vs effective income — see how it flattens out? [1] The marginal effective tax rate is higher the more children you have. This analysis does attempt to take cost-sharing subsidies for health insurance into account, although it’s not clear what level of health care utilization they are modeling. The most fascinating thing about the curve on slide 6 is how “After-Tax Income” starts at about $19k (the value of the govt subsidies) and by the time the parent is earning $60,000 has only increased to about $40k (66% effective tax rate), and there is a point on the curve where slope is negative — earning more leaves you worse off! [1] - https://www.cbo.gov/system/files/2018-06/54093-taxrates.pdf https://www.cbo.gov/system/files/2018-06/54093-taxrates.pdf

roel_v 8y ago

Most of that research has been shown to be bunk.