Ummm. you’d save more than $300, since you’d also save the taxes he now pays, but you’d give up all the income he now makes. Unless his income is less than your incremental savings in taxes, you lose. I neglect the other savings from not working, of course.
My wife is a freelancer, and we’re in a fairly high bracket, so her income is taxed at the incremental rate. There is no point at which it does not make financial sense for her to take on additional work - sense in terms of sanity is something else.
Except I never said they did - I quit working because I had to. It was only after that something I’d been suspicious of appeared to be true - it really didn’t make any difference to our finances if I worked or not. But of course, since you couldn’t even bother to read/understand/stay with my original point, I guess it is no surprise that you are making assumptions that have been previously addressed and discounted.
Uh, yes? You haven’t been paying attention at all? We are paying (a lot) less tax - I am not working.
Again with a dollar amount you pull out of your butt…
So, your point one is invalid, your point two agrees with me and your point three has a mystery number and a point that has nothing to do with anything I’ve said. Good job.
An insult.
And I’ll give you credit for finally getting close to understanding the very simple thing that I have been saying - that as the reward for working harder goes down, there will be people who will decide to opt out of it.
Did you bother to read what I was responding to?
I suspect your failure to grasp the point that math has zero to do with my point is willful.
And all you have done is stamp your foot and tell me I’m wrong about something that I haven’t said anything about.
Wow, it took you a long time to get to this thread! On vacation?
Did you learn the “win teh interwebs argument” method from SenorBeef? Exaggerating to the point of stupidity?
Well, for one thing, I didn’t have a career, I had a job - I worked to make money, period. For another thing, as I said, taxes didn’t enter into the decision for me to no longer work. However, you are supporting my case here in that you might consider all of the non-financial things that would make you decide to quit working, or as Chessic Sense said and I have said, decide against overtime. There comes a time when the smaller reward for working harder just doesn’t cut it in the face of everything else you lose.
Exactly. I’ve never said that one doesn’t get to keep anything out of a raise or additional work, it’s just that as you rise up thru the tax levels, you get to keep less and less of it, to the point that it isn’t worth it to get a raise or take on additional work.
One thing this brings up to me (and some will call it dodging and weaving but I don’t really care what those folks think any more) is that I failed to realize way back when I made my first post that people who are living near/at/over their income will probably be far more likely to notice any drop in income, and it seems like those kinds of people are rather common these days. Perhaps that is why some people here can’t conceive of anyone losing income and not really being hurt by it.
It sounds like you get it, then. You recognize that there are “terms of sanity” and “financial sense” and those are competing pros and cons. When the tax rate goes up, I get less money for the same sanity sacrifice. Is it a surprise that some people are on the margin and just barely breaking even in the sanity-money trade already?
For some reason, every time I bring this up, liberals retort with “You can’t make more money by quitting your job!”, as if that refuted the point at all. :rolleyes:
Wait, wait, wait. Let me get this straight. You’re saying that if a $50,000 earner considers taxes when making career choices, he fundamentally misunderstands taxes?!
So I’m to believe that the person that thinks about taxes doesn’t understand them, but the person (like you) that doesn’t factor taxes at all understands how taxes work? That’s an interesting viewpoint. And by interesting, I mean stupid.
“If you even think about taxes, you fundamentally misunderstand them.” Wow. Just wow.
Again, I didn’t say that. And when I did show numbers, you (or someone - don’t remember now) told me I was wrong. So at this point there is no place to go with this since all you want to do is win an argument with a stranger on the internet who has zero influence on your life.
Uh, OK. Maybe it was the misspellings that caused me to completely misunderstand that one - still don’t understand how being against buyer beware translated into you thinking that (more) regulations on the mortgage industry may be appropriate.
Do you understand the difference between a quote and a misinterpretation? Serious question here, since you seem to think quoting my posts back to me is supporting your misinterpretation of them.
File for bankruptcy, pay pennies on the dollar to settle your debts, go on with life. Remember, not all bankruptcy is Chapter 7.
OK, so “rush” was a bad word to use, but its still true that far too many people run up debt they have to know they couldn’t handle and then just make it all go away thru Chapter 13. The losses those people’s creditors took are then passed on to the rest of us. Chapter 13 filings are rising - because ambulance chasers are advertising them? I don’t know, but the consequences for being a financial idiot don’t seem to be an issue for many people anymore.
I cannot speak directly to most of what followed this because you didn’t make it clear who was saying what, and I’m having enough trouble following what you are saying as it is. If you want to discuss it, you’ll need to repost it in a clearer format.
I didn’t lose 20K in income - this is all pre-tax remember. What is unknown is how much we actually lost because I don’t have the exact figures from four years ago, but there would have been at least $5K taken out by the IRS alone, not to mention state income tax and all the other payroll taxes. I’ve been very clear that I don’t know what the exact numbers are but that we appear to be working with the same amount of money, minus some adjustments I made.
I cannot be held responsible for what people want to read into what I post and I certainly cannot be held responsible when their first impulse is to focus on some tiny detail, that doesn’t really apply, as rudely as possible. As I said waaay back when, the only difference I know of is the amount of tax we pay, but I’ve never said I’m all knowing, all powerful - someone could easily have said “but what about X?” But in the true childish fashion of some posters in here, they went straight to Plan A. Ah well, provides an interesting insight into how some folks, er, think.
A fair point; I was too glib. To clarify, if you factor taxes into a $10,000/yr raise and figure that it won’t really be $10K, that’s so routine it’s hardly worth mentioning. However, if someone passes over a promotion because it’ll mean they’ll “get bumped into a higher tax bracket” – or, conversely, as exemplified by resident genius curlcoat, if you think that giving up $20K in income means you really won’t be losing anything because you’re going into a lower tax bracket – that’s a fundamental misunderstanding of how taxes work in this country.
Well, if I were that sort of person, I’d say that you are, ahem, “evasive and excuse-laden” here, since you seem to be saying something completely different here when Chessic Sense called you on it. Now, if we can just work on you being able to understand I’ve been saying pretty much the same as Chessic Sense said in post #436, yet that is OK with you?
Listen, I don’t think youa re a hard core right wing nutjob. I think you have some misconceptions about taxation. Perhaps your position has refined a bit over the course of this thread (which would be great) but the notion that taxes reduce take home pay and that net pay is not as much of an incentive as gross pay was simply not your point to begin with. Even if taxes were a flat 10%, this would be true.
No, your belief (which we have been trying to disabuse you of) was that taxes were so high that there wasn’t you didn’t notice quitting your 20K/year job. You started to equivocate and eventually said that you were sure taht teh difference wasn’t $10K. Well I popinted out that you didn’t even have a 50% tax rate, bnever mind a 100% tax rate.
Unless you are using a special language where your words mean something different than what they mean to the rest of us. If you have changed your position or if you overstated your position to begin with, then fine but your original statements indicated that you were being taxed at a rate of at least 50%.
And how is Chapter 13 a bailout? Chapter 13 has been part of the bankruptcy code since its inception.
I guess I was offended by your insinuation that we were rushing to bail out financially irresponsible people. The thing is, there have ALWAYS been financially irresponsible people and the thing that prevented them from brorowing more money than they could afford to repay has ALWAYS been the folks who were lending the money and wanted to get repaid. This broke down and lenders started lending money to anyone who could fog a mirror, and then they actively started selling mortgages to people who had paid off their homes (cash out refinancing).
The consequences of a bankruptcy are fairly severe. It remains on your credit report for 10 years, this influences your ability to buy a home, start a business, get a JOB, and you don’t make it ALL go away under Chapter 13. Chapter 13 is a form of debt consolidation and rehabilitaion, not debt relief, you have to get court approval to take out new credit during teh rehabilitation period. And to be fair the 2005 Bankruptcy law makes it hard to obtain debt relief in nay form if you make more than the median income in your state.
You seemed to be attributing it all to taxes.
A group of people didn’t all imagine what you said. It wasn’t earthshatteringly offensive, it just seemed to be contrary to the rules of math. If you were in fact saying nothing then fine but you made an observation that most reasonble people would say was linking taxes to no noticable difference from a drop of $20K in your income.
To be fair, I think she understands the concept of marginal tax rates, its just that she has a misperception of how high her marginal tax rate is. Her federal marginal tax rate seems to be 25%, and somehow she thinks that all these other taxes are high enough to bump that up to a level where she doesn’t really notice the income hit from losing 20K in income. She explicitly said she thought it had to be more than 50% because she would notice a 10K difference.
Let’s take a single guy who’s earning $34,500 per year working a straight 40 hour week. He’s at the top of the IRS’s 15% tax bracket so he’s paying $5,175 in taxes taking home $14.10 per hour or $29,325 per year. Yes, we’re ignoring everything but federal for purposes of this hypothetical.
So his boss comes to him and said “Schmedley, you’re doing a bang up job! I want to offer you a promotion! You’ll get $50,000 but you’ll have to work 50 hours a week.”
So Schmedley goes home and does some calculations. First, that extra money bumps him into the 25% tax bracket. But only for the last $15,500 so he’ll be paying an additional $3,875 on that money. Sucks, right? But he’ll be taking home $40,950 or an effective raise of $11,625. Of course he’ll be working 2,600 hours a year and that means his hourly pay is $15.75.
Sure, if he’d have remained in the 15% tax bracket while still getting that raise, he’d have gotten to take home an additional $1,550. So taxes definitely play a factor. But at the end of the day, no matter how you slice it, he’s still taking home more than he did before.
So taxes absolutely can factor into your calculations…but they’re NOT going to factor into your decision. Why? Because the bigger variable is that 50 hours per week. THAT is what Schmedley’s making his decision on. Is it worth giving up an additional 520 hours a year for that amount of money?
If the boss said “Schmedley, here’s a raise. Keep on truckin’!” this would be a no brainer, right? You wouldn’t even look at the tax implications. You’d just say “thank you” and go on with your day.
So I ask you. Give me a scenario where taxes enter not into your calculations, but as a significant factor in your decision?
300 a month. It would be a factor for us. It has nothing to do with the changes in his taxes (which would go to zero) but has to do with being able to claim additional things against my income.
We would still be out his entire salary though.
(And it certainly has nothing whatsoever to do with marginal tax rates which I was educated on when I jumped tax brackets in my second year of employment.)
Can you people not claim additional deductions if one of you is not working and/or your income is reduced? Things like heating costs, dependants. Maybe our tax system is very different here.
You could say that. It’d be totally wrong and idiotic, but you could say it. I wasn’t evading or making any excuses whatsoever; I was admitting that I did not communicate effectively. I was glib. I misspoke. I was imprecise with my words. The fault is entirely mine. These are all the opposite of an excuse.
This is just patently absurd and obviously false. You’re not just moving the goalposts; you’re changing the game from football to tiddlywinks. Chessic Sense highlighted differences in daycare, gas, and effort, and said that taxes could influence a decision to quit a job. In contrast, you said (emphasis added)
You didn’t say “Due to differences in daycare, gas, not buying that $3 breakfast burrito on the way to work every day, the disability check I now collect every month, minor modifications in our spending habits, and taxes, we haven’t noticed much of a difference.” Nope, you said “Due to the difference in the amount of income tax we pay.”
One wonders, if you’re not noticing a decrease in $20,000 annual income, why you don’t tell your husband to reduce his commitment enough to drop you another $20,000. After all, you’re not losing anything – those rapacious taxes take nearly all of that 20K anyways – and he’d be gaining extra free time. So you should tell him not to work Fridays anymore, right?
I don’t see how you can say that a 25% cut from pre-tax to post-tax is insignficant, but let me dress it up a little and we’ll see if I can get you to say it’s significant:
Your boss says that since you’re such a good employee, he wants to promote you to Sara’s position when she retires next month. The new gig comes with the corporate car, so that’s cool, and you can even telecommute on Fridays. Not to mention, you’ll be boss…and that’s badass all on its own.
But if you don’t want the job, he understands. It’s a lot of work. But hey, he’s tired of their competitor poaching all his good workers, and he wants to keep you on board and happy, so if you don’t take the promotion, he’ll give you an extra $15,000 on your salary after your next annual review which is coming up shortly.
Oh, and he wants your decision by Monday.
So you head home for the weekend with two options: Cool job with benefits or $15,000. You think it all out and figure that you value the benefits at roughly $12,000 a year. Which one should you take?
Now I haven’t told you what your current salary, and thus tax rate, is. But hey, if it’s insignificant, then I shouldn’t have to tell you, right? Or do you think you oughta find it out and work out the math on a napkin before telling your boss your decision?
I could make up these scenarios all day involving variables like longer commutes, opportunities to meet celebrities, travel perks, staying home with the kids, picking up new skills, earning/losing seniority, employer-paid health care, stress level, and so on. All of those things are untaxed and yet should be counted as “compensation” from a job. Your salary, however, is taxed. So yes, you should factor in taxes before making any job-changing decisions as it’ll cut that 1 raise into an effective .70 raise.
Current salary is less important than knowing how much more Sara’s position pays than my current one; you also haven’t indicated how much more work it’ll require. If it’s $250,000/yr more and not much more effort, the tax rate could be double what it is now and I’d take it. If it’s $1,000/yr more and twice the effort, the tax rate could be 2% and I wouldn’t take it.
Care to add these details – you can leave out current salary, if you’d like – or are you content to make your situation a riddle simply by artificially leaving out information?
