Suppose I am a welfare recipient and I decide to earn some more money. What will be the bottom line? How much extra money will I take home if I earn more money? What is the marginal tax rate I will experience?
Excellent read. Thanks for the post.
Wow - thats a lot of incremental labor for no net income advantage. This message certainly needs getting out. The disincentive to labor up to $60k in earnings - that’s over the national median income for heavens sake.
BTTT
It’s not just at lower income levels.
I’m fortunate to make a pretty decent salary.
My wife is a homemaker.
She had a part-time job briefly, but every dollar she makes is essentially taxed at the same rate as if it were tacked onto the upper end of my salary.
We get more value from her staying home and managing the household than we get from her working, unless she were to get a fulltime job with a good salary - and that has it’s own set of costs/benefits - another car, less time for meal prep, laundry, etc., plus the stress. We save more by her making all the meals, packing my lunches, and growing veggies than we would gain from her working instead.
We’re both healthier and happier and she works just as hard at home as I do at work, if not harder.
I was a product development engineer. I had a record of two smash successes in a row, making millions in profits and saving (along with my chemist compatriot) a $100 million division of a Fortune 200 company. In 1995 all they were paying me was about $85K. After Federal and California State taxes, the day care bill, the private school bill, the extra car, gas, etc, after working 90 hour weeks, living 25% of my time overseas, watching my poor wife deal with two young children while holding a job, watching the kids' behavior deteriorate under all the stress and BS that came from the school... I was making a net profit of about $10K.
We pulled the kids from school and I quit my job to write a book. I told the wife that if we produced outstanding kids as a result we'd be money ahead from the scholarships and that is exactly what happened. We're sending two girls to college now for about $10K per year beyond what it cost us to have them at home. They will graduate from Stanford and Utah State with no debt.
Had I stayed at work I have little doubt that I would have seen much of that money disappear into medical bills, possibly a shrink or a divorce lawyer, goodness only knows but they'd have almost all been Democrats.
My dad did it the usual way. While I was growing up, we'd moved 16 times and my family had endured three divorces. He lost three houses and ended up a bitter and broken man. Nobody in the family has recovered from it.
In return for quitting, I had the great privilege of raising my children to be wonderful people. They were born, raised, and went to college from the same house. I had the great privilege of research and discovery. It has been hard, but in my judgment it was worth it.
Meanwhile, I've written a second book, patented a free market environmental management system, and made important discoveries or developments in three distinct career fields. Don't know where it will lead, but it sure as hell was better than workings.
bttt