Two much Overtime.

[jimjam]

I work alot of OT with my job. I`m paid by the hour. Just want to where the fine line is. After how many hours do I stop getting paid and therest goes to Ottawa.

Are ther any websites out there that do the math for me.

 

[drlove]

Never Enough....

That's the wrong attitude to take. True.. you will pay tax, that's a fact of life. There's nothing you can do, so why waste your time dwelling on it?? You only have two options: stay at home and do nothing, or get out there and try to get MORE. If your concerned about having the tax man get too much of your dough, max out your RRSP contributions or put it in some other fund, like money markets. At least you stand to make something.

Make no mistake about it - MORE is what it's all about - it's the American Dream. Do you want more money or less?? It's up to you. Point being, stop wasting your time thinking about losing money. Better that you devote all your time and energy into figuring out how to get more money in YOUR pocket. You'd be surprised at the end result.

 

[tboy]

That's not entirely true love....in our (ontario) society the more you work OVER the table, the higher your tax rate. If say JJ works so much ot that it puts him into the next bracket, he will be taxed on his entire pay, at the higher rate. Sure he's "supposed" to get that money back at the end of the year, but if he doesn't find a RRSP or something, it aint worth it.

JJ I haven't checked for a while but the ranges used to be: 10 - 30K 23% 30K - 50K 30% 50K + 50% I know they've changed and you can find the new scale at the Revenue Canada Website. I remember one time I got a really nice raise which put me into the higher tax bracket and I ended up taking home less than before. The new rate took more off my pay than the increase.

If you are working a lot of OT you might want to propose to your employer alternative means of compensation:
1) Bank Hours: Take time off when business is slow
2) all expenses paid vacation: NOT taxable as of yet (aka 2 weeks in bahama's)
3) Car Allowance: WHile this is taxable its not taxed at the same rate as wages
4) Gift Certificates: Home Depot or ?? Gift Cards: company gets a tax break for these gifts and they are tax free to you
5) Direct donations to an RRSP: you get the full benefit of the funds, no taxes on them until you retire.

Depending on how many hours you're working any of the above could be applicable. If you're working 20 or more OT hours a week, I'd be looking at altenatives.....

 

[jimjam]

I understand what your point is.
Just listen to this.
One paycheck ( two week period) 40 hrs work, thats 80 hrs. Plus the OT say 92 hrs. are ui still wth me. $1299. OK. =12 ot hrs.
Now watch this 80 normal hrs again plus say about 33 ot hrs
thats 113 hrs my pay is only 200 to 230 more. If you do the math
at one point I stat working for less than half my hourly wage. Get it?
Now how can I find out when to stop the OT.

 

[jimjam]

Dont make me write that again or it will be a long night. I`m almost ready to break out the rum and calculator.

 

[tboy]

that's what I was saying before, you're actually "making more money" only because of the hours, your per hour rate actually drops when you incur too much OT.

There is actually a rule on the labour board site that limits the amount of overtime one employee can do in a week period.

Check out the ministry of labour website.

 

[jimjam]

Thaks tboy I`ll check it out.
By the way do have a direct Link.

 

[onthebottom]

This

The highest marginal rate of 46% kicks in at about $107K (if memory serves), which is a lot better than the 53% at $59K a few years ago.

Sure, you're hourly rate will diminish as you escalate up the pay scale. But, you are still adding to your overall wealth. At least most (54%) of what you earn stays with you.

High tax rates do result in uneconomical decision-making. As intimated in this thread, there may be a "psychological" barrier at $107K. At $107K, people may simply say, "I've worked all than I want to work, because working any harder is not worth it".

This, along with the "underground economy" are the best reasons for reducing tax rates. As a capitalist society, we should value ambition and hard work.

Line of math and thinking drove a much-maligned economic concept called the lauffer curve. Arthur Lauffer supposed that (from the Governments perspective) that if tax rates were 0% the government would collect 0 AND if the tax rate were 100% the government would also collect 0 because no one would bother work.

If you followed the above you must realize that at some point, as you raise tax RATES tax income falls because taxes are a disincentive to work (which generates wealth). The curve is where the graph (think of this as tax rates on the X axis and tax revenue on the Y axis) turns back to the left.

If I've completely lost you, take two shots of tequila and try it again. Keep repeating until you either get it or can't work tomorrow because you have a hang over.

Some anecdotal evidence (that will really piss off the anit-USers on this board) would be to look at the US. The US has the highest per capita income (wealth creation) of large countries and the lowest marginal tax rates. So the lesson is (for those of you going to the church of Regannomics - to which I belong) that the lower the taxes the richer the economy.

Liberals feel free to flame away on class warfare and momentary deficit topics to your hearts content.

OTB

 

[jimjam]

Oh I get it now Large Country Canada small Pop.
High Taxes.
I work long hours. = I bend over and the Guy Behind is called Canadian Government.
I hope the tax man put the condom on. Because I couldn`t get to the store, I was working to much.
Jersus Christ.

 

[Fortunato]

Re: This

Line of math and thinking drove a much-maligned economic concept called the lauffer curve. Arthur Lauffer supposed that (from the Governments perspective) that if tax rates were 0% the government would collect 0 AND if the tax rate were 100% the government would also collect 0 because no one would bother work.

If you followed the above you must realize that at some point, as you raise tax RATES tax income falls because taxes are a disincentive to work (which generates wealth). The curve is where the graph (think of this as tax rates on the X axis and tax revenue on the Y axis) turns back to the left.

Some anecdotal evidence (that will really piss off the anit-USers on this board) would be to look at the US. The US has the highest per capita income (wealth creation) of large countries and the lowest marginal tax rates. So the lesson is (for those of you going to the church of Regannomics - to which I belong) that the lower the taxes the richer the economy.

Well, Mr. OTB, you seem to be confusing concepts again.

First, the way you throw around the term "rates"... Laffer (not Lauffer) bases his premise on overall tax rates (tax "totals" as a proportion of income, as it were); however, the question involved relates to "marginal" tax rates. In progressive tax regimes (like Canada and the US), it is a falacy to assume that making more will EVER make you worse off (the uninitiated "tax bracket" argument), because the increased rates are only for the increased amount you earn. To use Laffer's hypothesis to suggest that our poor friend Mr. Jam is not better off by taking the additional work (even if he is better off only at a decreasing rate) is irresponsible.

Second, I disagree with your assertion that taxation is the primary reason for economic success. If that were the case, taxation arbitrage would have destroyed even your majestic US economy, for preferable environments in many other areas. Likewise, we would expect greater continuous success from other economies focusing on low taxes (Ireland, Russia, etc.). And to suggest "causation" from such a simple model is as logically valid as saying "US has low marginal tax rates", and "gravity works"... therefore "low tax rates creates gravity for all Americans".



Don't get me wrong - I loathe taxes myself, and encourage both tax and spending cuts... but that is because I don't believe that governments spend money well (I don't believe the propaganda that tax cuts for the rich, or deficit spending "creates wealth")... and I am far from being anything you could refer to as "liberal". However, I cannot help but laugh at "Reaganomics" (as you quote) simply because it seems entirely based on illogical conclusions.

Well, that and I find most true disciples of Reaganomics are just plain wierd.

Best regards,

F.

 

[Ref]

2) all expenses paid vacation: NOT taxable as of yet (aka 2 weeks in bahama's)
4) Gift Certificates: Home Depot or ?? Gift Cards: company gets a tax break for these gifts and they are tax free to you

Technically these two items should be declared as taxable income

 

[ToronToto]

....If say JJ works so much ot that it puts him into the next bracket, he will be taxed on his entire pay, at the higher rate.

Lets say he made $64,368 (taxable income) this year (2003), he would pay $12,230 fed tax. This is approximately 19%. (Note , this does not include provincial tax, etc).

For every $1,000 taxable income thereafter (up to $104,648), he'd pay 26% federal tax. That is, the tax rate increase is NOT on his entire income. It does mean that he'll be paying ~46% (ON) as noted by Sukdeep on his OT pay. So it's up to one to decide if working for 54% pay is worth it.

Yes, I'm doing my taxes, and it's suxs.

 

[onthebottom]

Re: Re: This

Well, Mr. OTB, you seem to be confusing concepts again.

First, the way you throw around the term "rates"... Laffer (not Lauffer) bases his premise on overall tax rates (tax "totals" as a proportion of income, as it were); however, the question involved relates to "marginal" tax rates. In progressive tax regimes (like Canada and the US), it is a falacy to assume that making more will EVER make you worse off (the uninitiated "tax bracket" argument), because the increased rates are only for the increased amount you earn. To use Laffer's hypothesis to suggest that our poor friend Mr. Jam is not better off by taking the additional work (even if he is better off only at a decreasing rate) is irresponsible.

While I undersand your point I don't know that it changes the argument. If the more I make the less I take home as a percentage continues, people will be less incented to work, as with our case study that started this thread. That was really the point, everyone has a threashold at which they'd rather sit home and watch TV than work.

Second, I disagree with your assertion that taxation is the primary reason for economic success. If that were the case, taxation arbitrage would have destroyed even your majestic US economy, for preferable environments in many other areas. Likewise, we would expect greater continuous success from other economies focusing on low taxes (Ireland, Russia, etc.). And to suggest "causation" from such a simple model is as logically valid as saying "US has low marginal tax rates", and "gravity works"... therefore "low tax rates creates gravity for all Americans".

I Don't know that I said it was the "Primary reason", I just said that if you look to PEER economies (the US doesn't really have a peer economy but the other G8 are as close as you can get) you will find that Americans make more money and are taxed less. You would also find our unemployment the lowest, I wonder if that's a function of lower taxes (may as well work if I can keep more of it) or more market based labour market (lower payments for sitting on your ass). There are no simple cause and effects in macro econmics, but trends can be diserned, and those trends favor open labor markets and lower taxes.

Don't get me wrong - I loathe taxes myself, and encourage both tax and spending cuts... but that is because I don't believe that governments spend money well (I don't believe the propaganda that tax cuts for the rich, or deficit spending "creates wealth")... and I am far from being anything you could refer to as "liberal". However, I cannot help but laugh at "Reaganomics" (as you quote) simply because it seems entirely based on illogical conclusions.

Well, that and I find most true disciples of Reaganomics are just plain wierd.

Best regards,

F.

Not wierd, just not under the media spell. Would agree on low taxes and spending, Government is the enemy.

OTB

 

[tompeepin]

Re: This

... if tax rates were 0% the government would collect 0 AND if the tax rate were 100% the government would also collect 0 because no one would bother work.

Here is one time I will agree with OTB. There is a crucial taxation balance point after which it either does not pay to work (be a slave) or it pays to cheat and the economy goes underground. In both of these cases the government looses tax money. However we could debate the merit of; tax cuts only or mostly for the rich as opposed to mostly for the working class and deficit spending. But those are entirely different issues.

To use Laffer's hypothesis to suggest that our poor friend Mr. Jam is not better off by taking the additional work (even if he is better off only at a decreasing rate) is irresponsible.

Don't get me wrong - I loathe taxes myself, and encourage both tax and spending cuts... but that is because I don't believe that governments spend money well (I don't believe the propaganda that tax cuts for the rich, or deficit spending "creates wealth")... and I am far from being anything you could refer to as "liberal". However, I cannot help but laugh at "Reaganomics" (as you quote) simply because it seems entirely based on illogical conclusions.

I agree with part two. But while you are correct as a bottom line in part one, in practical terms very few would take an hourly pay cut to work overtime. Quality of life has a price also, not everything = total $$$, and there is a dollar earned to effort ratio as a motivation to work (clearly seen in the motivation for most sps, but it hold true for all of us), unless you are extremely desperate.

 

[The Shake]

I work alot of OT with my job. I`m paid by the hour. Just want to where the fine line is. After how many hours do I stop getting paid and therest goes to Ottawa.

Jimjam - Someone has sold you a load of bullshit. There is no point where you "stop getting paid". If this is happening, your employer is stealing from you and/or defrauding the government.

Your actual income tax payable is calculated on your actual annual income - it doesn't matter whether you make $500 per week for 52 weeks, or $1000 per week for 26 weeks - the tax you owe the government remains the same.

Even if your overtime pushes you into the next tax bracket, the actual out-of-pocket difference is fairly minimal. Someone is playing you for a fool.

 

[spartan5782]

Re: Re: Re: This

While I undersand your point I don't know that it changes the argument. If the more I make the less I take home as a percentage continues, people will be less incented to work, as with our case study that started this thread. That was really the point, everyone has a threashold at which they'd rather sit home and watch TV than work.
OTB

While I understand everyone's aversion to paying a higher percent of tax as income increases...I feel the same as DrLove stated:

Make no mistake about it - MORE is what it's all about - it's the American Dream. Do you want more money or less?? It's up to you. Point being, stop wasting your time thinking about losing money. Better that you devote all your time and energy into figuring out how to get more money in YOUR pocket. You'd be surprised at the end result.

Using the logic being kicked around here in regards to overtime, the same I guess can be said in relation to pay raises? If you are currently making $30,000 a year and were offered a promotion with a raise to $45,000/yr...would we think twice about it, knowing that we would leap into another bracket on the additional $15,000?? Of course not...fuck the taxes and give me the $15,000. Now the presumption is that you are talented enough to be made the offer and there's "probably" a tougher degree of difficulty in the new job.

So, how does one equalize that scenario if he doesn't possess the skill for a promotion, but still wants to make $45,000/yr? It's called overtime, or a second job...but overtime will give you a better payoff with less hours usually. Instead of 40 hours, you average 53. At time & 1/2, you are grossing $45,000. If your taxes go from lets say 30% to 40%, your take home goes from $21,000 to $27,000.

If the additional work isn't worth it...as others have said, don't work it. But my opinion, the focus should be on "What am I going to do with the additional $6,000 take home" so there's a feeling of accomplishment at the end of the year.

 

[tompeepin]

Re: Re: Re: Re: This

Using the logic being kicked around here in regards to overtime, the same I guess can be said in relation to pay raises?

Pay raises are fine, usually one does not have to work more, one just gets paid more. For OT one has to work more hours. For many the extra hours (a jump just over the line in the tax bracket) are not worth the little extra in pay. That is the point. Hey anyone can get a second job at night making minimum wage, why don't you all do it? You would surely bring home more money!

 

[spartan5782]

Re: Re: Re: Re: Re: This

Pay raises are fine, usually one does not have to work more, one just get paid more. For OT one has to work more hours. For many the extra hours (a jump just over the line in the tax bracket) are not worth the little extra in pay. That is the point. Hey anyone can get a second job at night making minimum wage, why don't you all do it? You would surely bring home more money!

Yeah, but that's the point. If you want to advance and have certain goals...but it's painfully obvious the promotion isn't going your way, one option is the use of overtime. If your goal isn't that strong (paying off your car note or saving for a down payment on a home)...if you have no motivation, you are absolutely correct...don't work the overtime. Turn it down...give it to the next guy who wants it. But to get caught up in the % of take home being 5 to 10% less....??? As The Shake said, it's fairly minimal. The taxes shouldn't come into play.

 

[Fortunato]

Re: Re: Re: This

While I undersand your point I don't know that it changes the argument. If the more I make the less I take home as a percentage continues, people will be less incented to work, as with our case study that started this thread. That was really the point, everyone has a threashold at which they'd rather sit home and watch TV than work.

The change in argument is large. In order for Laffer's theory to work at all, there must be a point of disincentive (i.e. where the tax you pay is actually MORE than the money you make for the extra services)... THIS WILL NOT HAPPEN UNDER OUR TAX SYSTEM (or yours). The incentive may increasingly diminish, and yes, possibly to the point that he may not want to work for the incremental benefit... but he is never "worse off" from incremental taxation (what is required for the true "Laffer" effect).

I Don't know that I said it was the "Primary reason", I just said that if you look to PEER economies (the US doesn't really have a peer economy but the other G8 are as close as you can get) you will find that Americans make more money and are taxed less. You would also find our unemployment the lowest, I wonder if that's a function of lower taxes (may as well work if I can keep more of it) or more market based labour market (lower payments for sitting on your ass). There are no simple cause and effects in macro econmics, but trends can be diserned, and those trends favor open labor markets and lower taxes.
OTB

Fair enough... but again, the implicit assumption of causation, or suggesting it is a reason at all. I would argue that the more recent American economic success has been as a result of the policy of economic colonialism followed since the mid 40's.... I would also argue that lower taxes are, in all likelihood, an EFFECT of the economic prosperity, not a cause of it (again, because low taxes are not proving as beneficial elsewhere). I would argue that low unemployment has more to do with low (non-existant) social payments than tax rates (c'mon... those generally on the unemployment bubble aren't making the decision to work because the marginal tax bracket at $200k is only 35%).

Outside of your economy, what other "low tax" example can you provide? None. Because, generally speaking, tax is simply a redistribution of wealth. Not a "creator of" / "destroyer of" (and, again, we have a very different interpretation of what wealth is anyways).


Again, I don't want it to sound like I'm promoting taxes... I support lower taxes and lower spending by governments, and I think that this is a good thing. I just don't like the way some of these neo-Cons slimeballs try to twist things to sound like "facts", just to support their self serving arguments.

...present company excluded, of course.


Best regards,

F.
(truly conservative... not "newly" conservative)

 

[Fortunato]

Re: Re: Re: Re: Re: This

Pay raises are fine, usually one does not have to work more, one just gets paid more. For OT one has to work more hours. For many the extra hours (a jump just over the line in the tax bracket) are not worth the little extra in pay. That is the point. Hey anyone can get a second job at night making minimum wage, why don't you all do it? You would surely bring home more money!

Absolutely, Mr. Tompeepin... and even if taxes weren't higher, your comments about quality of life and choice are still valid.

I guess what some of us are saying (or at least what I am saying) is that tax marginal tax rates are unlikely to be a key factor in this decision, and we feel a lot of folks are making the tax "too central" to the actual question... you won't be taxed 90% on the overtime earnings... you regular earnings won't be taxed more because you worked overtime... and, in the end, you will have more money than you did if you didn't work overtime.

Is it enough to justify losing the personal time? Personal decision, to be sure... and hopefully he gets to choose.

Best regards,

F.