Posted on 12/10/2012 7:56:08 AM PST by Kaslin
I was shocked by something I heard from one of my friend’s sons the other day. He is a college graduate with a business degree and fortunately has a job. We were all talking about the fiscal cliff and how it would affect people making over $250K a year. His reaction to the top rate rising to 39% along with the California State tax increase due to Proposition 30 prompted him to say, “Whew, I think I dodged a bullet! I was up for a promotion with a pay raise but someone else got it. I’m pretty sure my taxable income will be under the level where I would have gotten punished.” PUNISHED.
He was basically saying that he would rather earn less and stop advancing in his career than be hit with massive taxes. I asked him to explain and he said that basically he didn’t want to work and then fork over 50% or more of his earnings to the government. He said that he had gone to school, studied hard and gotten a job but was still burdened with excessive student loans and he felt that with that hanging over his head he couldn’t afford to pay more in taxes.
As for buying a home and starting a family, well that was not even an option for him. He said that if they were talking about taking away the mortgage home deduction then why buy a house anyway?
This is where we have come in this country. It is now a better option to take a lower paying job, rent a home or live with mom and take government benefits than it is to climb up the ladder to success. The American dream is fading folks. Like an old photograph from a Polaroid instant camera, the picture is slowly disintegrating.
Our entitlement society is out of control. It is a sad fact that a head of a household of four making minimum wage has more disposable income than a family making $60,000 a year. In an article in August 2010 this issue was discussed in The National Review.
“In many cases, economists have calculated, welfare recipients who enter the work force or receive pay raises lose a dollar or more of benefits for each additional dollar they earn. The system makes fools of those who work hard.
“Recently the chairmen of two important subcommittees on Capitol Hill convened a hearing on this issue. The hearing elicited some revealing testimony from one of the chairmen’s congressional colleagues.”
“The more benefits the government provides, the stronger the disincentive to work,” Representative Geoff Davis (R., Ky.) pointed out. The great irony, he added, is that although federal welfare programs “are designed to alleviate poverty while promoting work,” collectively they have “an unintended side effect of discouraging harder work and higher earnings.”
Less work and lower earnings, in turn, translate into greater dependency on the government — and zero or even downward social and economic mobility for those mired in poverty.”
Working women who are single with children often forego a raise because it would push them into the dilemma of losing Title 20 daycare if they made more money. There are over 70 Federal welfare programs right now and the list will continue to grow under Obama. If a person works and climbs the ladder, they will become disqualified for these programs and lose all of the benefits that they have become so accustomed to.
This creates a moral dilemma. When good people continue to stay on unemployment because taking a job would not pay them as much as their benefit, how can you really blame them? We don’t live in a culture where people are embarrassed to ask for a handout. It is so easy just to file for benefits by computer, have the funds deposited directly into your bank account or take your EBT credit card to buy anything you want. There is no shame in taking government assistance, you are entitled to it.
“Today, more people than ever before—67.3 million Americans, from college students to retirees to welfare beneficiaries—depend on the federal government for housing, food, income, student aid, or other assistance once considered to be the responsibility of individuals, families, neighborhoods, churches, and other civil society institutions. The United States reached another milestone in 2010: For the first time in history, half the population pays no federal income taxes.” - National Review
So the tipping point has been reached and now the government is scrambling to grab any and all money that working people make just to pay these entitlements. Unfortunately, the American people are waking up and becoming more like the young man I talked to. They are seeing that their hard work and effort is not benefiting their own families, but being redistributed to others; some who need it and others who just don’t bother to work. Look at the major companies that are paying out dividends before the huge taxes kick in. They can see the writing on the wall and are preparing for it.
The young already know that they will probably never see social security or Medicare benefits in their lifetime yet they see it withdrawn from their checks every week. They are the ones sensing the “unfairness” of all of this, not the people reaping the benefits.
This is NOT America, this is not who we are as a country. If we don’t stop punishing success and achievement, future American generations (if there are any) will be content to sit at home and count their government goodies but will never excel at anything, never strive to be anything. There will be no incentive to achieve success. Why should you? It will just be taken away.
Once the so-called “rich” have been drained dry the only option left for the government will be to just keep printing money. That lasts until the economy collapses in on itself and by that time the country we knew will be just like that fading Polaroid, a memory.
Morgan Brittany
Politichicks.tv
@Morganbrittany4
Luckily I’ll never find out, ‘cause I’ll never make even 1/2 of that.
Am against all income taxes but get real. These are marginal rates. Even if rates go up for the top bracket, somebody making 275K makes more that someone making 250K. It is just that 275K is making less than before.
You won't sacrifice for what is right?
You support profits regardless of consequences?
Profits over principle?
How's that worked out for the U.S.?
I personally would turn down more money if it meant supporting corrupt government with more and more cash.
Another thing to note is that entitlements become generational. The brood moms of today are raising the next generation of takers; likely just as they themselves were raised.
If a person made $260k/yr, couldn’t they take $11k pre-tax earnings and invest it in something that is tax free? Wouldn’t that make their taxable income $249k?
Obama extolls the virtues of a college education alright but only if you use it to serve mankind not get ahead for yourself. FUBO!
He better be careful making his thoughts publicly known. We all know it his duty to be as productive as he possibly can be...
From each according to his ABILITY, to each according to his need.
He didn't say it was because of the federal tax increase, but because of all the tax increases.
You have to think like an economist, not just a plugger. How much more effort does he have to put in to get that additional cash in the pocket? What's his return on investment?
Let's assume I can work for an hour before the raise at $125/hour at an effective tax rate of 40%, so I take home $75/hour. Now let's assume I get a raise to $135/hour, but take my effective tax rate to 43%. Now I take home $76.95. If I'm doing exactly the same work for exactly the same hour, then it's a free $1.95 and I have no complaint. But if I take on any additional responsibility or have to put in any additional more effort, the $1.95 may not be a reasonable return. I might be happier if I kept the lower rate and the lesser responsibility.
And, if you do the math, if I only get a raise to $126/hour at a new 41% effective tax rate - I lose money.
You would still take home more money if your salary went from $249,999/yr to $250,001/yr if the Bush tax cuts expired.
Is this really why a bunch of people oppose the Bush tax cuts expiration, because they think they will take less home if they take a raise and get pushed into the >$250,000 tax bracket? Because if it is then you are wrong.
“the governemnt will step in a select people it likes to be society’s aparatachiks.”
Our name is Equality 7-2521, it is illegal to write this.
I know you kind of meant that tongue-in-cheek, but you actually made the author's point. You're lucky you will never make that much money.
I remember you from the old days when I was more active. You're pretty smart, so I don't know why you limit your earning potential. I always look at any tax situation and earning situation is if I will one day earn $500,000/year or more. Under the old America, there was nobody stopping me but me.
If I can stick my nose in where it doesn't belong, I talked about this a little in my prior post (#33...).
I think that it's about diminishing returns. (If I made that kind of dough.....) I would work equally as hard for dollar #250,001 as I did for dollar #1. However, I'd get to keep substantially less of it.
Most people, not all but most, have a point where they say "Why bother?". In my case, I'm underpaid for my position in my field. However, the trade-off is that I work 8 to 5 with no nights, weekends, or travel. Heck, for the moment anyway, I don't even carry a cell phone! (It's heaven, after taking 3am phone calls on a near-nightly basis. I'm sure that all good things will come to an end, eventually, though.....)
Could I command a higher salary in a different position? Sure. Easily. Probably wouldn't take more than a phone call or three. But I'd lose dinners with my family, and Cub Scout outings, and sleep at night, and school Christmas Plays, and, and, and.......
For some people, I'm sure that it doesn't matter. They want to wring every penny out of what they can make. Or, they've not sat down and figured out what they're *really* making at the end of the day (I know a lot of 2-income families where one is working only to pay taxes, day-care and commuting expenses. I can't wrap my head around THAT one!).
But for a good handful of people that I know, quality is more important than quantity.
“Are taxes really punishment, or simply the way govts generate revenue?”
Depends if you are the government or the worker. The US tax code is obviously written to reward certain behaviors and punish others based on the good/bad judgements of the idiots in congress. We have all gotten used to this manipulation and consider it normal - but it is just government interference in people’s lives and an attempt to direct their actions.
Your effective tax is based on every taxing authority you pay to, not just the fed.
Unfortunately, I live in a place where the state and local take a hefty chunk. When my salary goes up I can, indeed, lose real income.
My earnings are determined by my employer and their contract with the govt. I like my job and don’t work very hard.
I’ve always believed that one’s income should be higher than, or at the very least equal to, their output.
How else do govts pay their bills?
In what world do you live in where additional taxes on a $2,000/yr raise pushes your effective tax rate up $3,400?
“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.
Absolutely!
I don’t know anyone that can make the choice between making $249k or $250k.
In post 37 you said:
Post 37 If a person made $260k/yr, couldn’t they take $11k pre-tax earnings and invest it in something that is tax free? Wouldn’t that make their taxable income $249k?
Which stuartcr am I talking to? ;)
Actually, it doesn't matter. A person declining the raise, or a person accepting the raise and then going to effort to hide the additional from the Fed is still doing something we would rather he not do. In the latter case, we want him investing the additional in the place where it will do the economy the most good.
Howard Philips once suggested that 1/3 of all U.S. business is spent hiding taxes from the Fed. Imagine if they did productive work!!!
Oh, and there's still the impact of that additional earning on non-Fed taxes.
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