Wow, if I made $250k/yr, the govt could take 60% of it, and we’d still make more than we make now combined.
With a progressive tax system, that is true. Everything OVER $250k may get taxed at 60%, and it would still be worth it to a lot of people.
Where they lose a lot of people is with the surcharge style taxes. I.e. when you hit the $250k number, you have an additional 10% tax on all of your income. So, if you make $249k, your tax bill is X. But if you make $250k, your tax bill is (X+$25k).
In the example above, you take home less money at $250-299k than you do at $249k, at a 50% tax rate. At $300k you break even. If the tax rate is higher, it takes even more to break even.
The question becomes, why bother? You might as well make right up to that limit, unless you are going to make far and above the break even point.
Exactly. Where the hell are these people learning their economics from?
But you'd do even better if you earned $249,999.99/year.
Actually, I think the penny applies at $250,000.01, but the point is still that you should not have to try to keep your salary under a ceiling so you can take home more money.
“Wow, if I made $250k/yr, the govt could take 60% of it, and we’d still make more than we make now combined.”
You are forgetting the additional work load, travel time, employee hassles, etc that go along with it. In the private sector, those incomes usually mean a very large responsibility.
It depends on where you live and the cost of living there.
My 2,000 SF house, built in 1971, was $730,000.
We live in CA and unless we move, there is no way to live cheaper, unless you want to live where the pay is low. It’s a trade off.
I lose way over 50% in taxes. Feds, State, Property, Sales, Gas.
You actually net about 30% of your pay, after you pay Uncle Sam(s).
From you to the President, EVERYONE leaves out expenses.
So assume you just have a job, and the normal expenses a typical family would have.
You have a mortgage, maybe even a second mortgage for home improvement, electric, gas, sewer and water bills. Your kid goes to college so you help pay a couple of grand a semester for them. You have a car payment, insurance, license fees and daily commute costs like gas, maintenance and repair. You have a family health care plan at work costing $200 a month with a 5% co-pay. Groceries cost $150 a week (that kid's hungry).
You make $90,000 a year. After all expenses and taxes are paid you have just enough to save a little, buy an occasional “keep of with the Jones bling item” and take a vacation somewhere nice every year.
Sure, then suddenly jumping to $250,000 a year with no increases in expenses except federal taxes is GREAT! But that's not likely to happen. Pie in the sky.
Suppose your job could be that much... I know, be a doctor, an MD!
Except medical doctors paid through the roof, generally, and probably have some debt even decades after, due to education. It costs a LOT and they spend productive years others are getting paid in while they stay in school. Then they have HUGE malpractice insurance bills. $80,000 - $150,000 is NOT unheard of, especially if you're in a high-risk of lawsuit practice like dealing with the elderly (who happen to die a lot) or deliver babies (every malformity is a lawsuit simply waiting for a lawyer). Now that $250,000 a year isn't such good money now, is it?
Now, say you own your own business. Say you have a small manufacturing plant that makes some widget used by other industries to make their widgets. Your dear old genius Dad, ever the tinkerer, got the business started and you got it when he passed.
You have a work force of 25 people or so. Over the years you used every profit you got to improve and automate your assembly line. It cost a lot but you saved a lot due to improved efficiency. In fact, your continued streamlining of the shop floor, including training for your workers, had an effect on the economy around you. The money you spent went to those businesses that served you, and this went on by the hundreds and into thousands participating, like you, in the American economy. So now you enjoy a nice profit. Then things went south. The economy tanked in 2008. You lost several contracts. Businesses that bought plenty of your widgets are buying fewer. Your profit margin sunk. you're barely breaking even, but Dang it! This is the company dear old Dad founded and I'm going to do all I can to keep it. I'll have to let go a few folks. Dang, I love ‘em all. Who to let go?
While your thinking this, Ole Obama is calling you a greedy rich b@st@rd. He's gonna raise your taxes, because your profits, which is also your income, is over $250,000 a year. Of course, you pay all your expenses from that profit, not just the bills the average guy has, but the payroll, loan debt for equipment improvments and any local taxes and rules, envorinmental, labor, etc that your sadled with. You wish you could afford one of those high-end, big corporation account/lawyer teams to find you tax shelters, but you reduced what you had last year to just stay afloat.
Now what happens to this business? Isn't it like hundreds, even thousands, tens of thousands of businesses around the country? Small factories, restaurants, stores, etc? And some of them have profits up to a million $. Yup, their taxes go up.
So they lay off people. Those people go on unemployment, maybe disability, welfare. More mouths to feed. Less revenues to big fedgov. Less to the state your in.
No, people, who should know better, are either stupid, lazy, ignorant, or just don't give a sh!t. But that's all right, it's all about “fairness”.