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?
And we wonder why illicit businesses (drugs, prostitution, gambling) thrive in that economy.
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Four times the hours, four times the per-hour productivity, same income.
Telling a large fraction of the population they have to work 16 times harder with no net gain will not go over well.
Stock up folks. Gonna be a bumpy ride.
Insofar as the person working 16x harder nets a couple thousand more, we can assume most of that goes to business expenses (attire, transportation, etc.).
I’m not sure where this person got his numbers, but first of all you have to assume that if he’s making gross of 60k he’s not contributing to retirement or healthcare costs and he also must not be taking any deductions what so ever. He apparently isn’t taking advantage of the child tax credit or their deductions and also would seem to be self employed.
Basically that’s a self employed guy not taking advantage of anything the tax code gives him. Quite frankly it’s just my argument for why the tax code is jacked up. You deduct enough benefits like 401k, IRA, Health insurance, etc., to allow for you to limit your income quite a bit, then you can get to a point where you can get the Earned Income Tax Credit and pay even less. I would guess that a family making 50,000 a year working for an employer that offers direct benefits would probably get a tax refund and essentially pay zero in income taxes(and it’s possible to get money back), oh yeah just through taxes you can get 6k-7k returns when you earned only 20k a year. I would bet that there would be larger families say with 5 or 6 kids that could easily zero out income taxes at maybe even 80k a year. Sure on payroll taxes you have to pony up but income taxes are essentially non existant on middle income families.