Two much Overtime.

[keeferz]

any tax tables or programs calulates the tax assuming you are earning that gross for the entire year. For example, if you gross 1000/week, thats 52000/year.
if you have an extra 500 in overtime one week, the tax is calculated as if you are earning 78000/ year, another tax bracket.
Unless, you are consistently earning that much overtime, you will get a tax refund at the end of the year.

Alternatively, you could ask the payroll dep't/clerk to reduce the tax on the big overtime cheques. That might not be possible with allcompanies though.

 

[onthebottom]

Re: Re: Re: Re: This

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 think the Laffer theory is a great example of exaggerating a concept to explain it (without having to get technical). If you make more money, you move into a higher tax bracket your effective tax rate will increase. As you raise the effective tax rate you add a disincentive to work. It's a simple concept.

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-existent) 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%).

Economic Colonialism? It's called free trade in a world economy - much to the worlds benefit. The US economic success is due to a very good higher education system (35 of the 50 top universities), efficient capital market, the worlds most efficient labor market, entrepreneurial environment, market based labor system, minimal government interference in business......

Low social benefits (I would call it market based labor policies) are one of the possible drivers of our low unemployment rate that I suggested. But you can't forget that taxation is a disincentive to work, which is the basis for this thread.

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).

Tax revenues as a percent of GDP were lower in Japan than the US (in 2000 for which I could find stats). Japan, even with pathetic growth rates until recently, is a very rich and productive economy.

Taxation is a redistributor of wealth, but I believe it provides an incentive to do nothing and a disincentive to work, thus it would destroy wealth.

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)

You prefer the Liberal slimeballs?

OTB

 

[spartan5782]

Re: Re: Re: Re: Re: This

If you make more money, you move into a higher tax bracket your effective tax rate will increase. As you raise the effective tax rate you add a disincentive to work. It's a simple concept.
OTB

But you can't forget that taxation is a disincentive to work, which is the basis for this thread.
OTB

Taxation is a redistributor of wealth, but I believe it provides an incentive to do nothing and a disincentive to work, thus it would destroy wealth.
OTB

OTB..I gather you truly believe that going into a higher tax bracket is a disincentive to work. I guess it may be to some, but I'm curious how true you are to your conviction?

If it's simply the tax rate, then the example I gave for pay raises should still give you cause to pause?? If a promotion and pay raise puts you in a position of a higher tax bracket...even though you will gross more and have more disposable income, would you be faced with a disincentive to work? The promotion may be a salary position and mandate more hours than the typical 40 per week...perhaps involve client entertainment and trade show attendance, travel...etc. Would you then breakdown the per hour expectation, add in the tax implications and perhaps turn down the promotion and raise? Of course it would depend on the raise..

Let's stick with my previous example of going from $30,000 to $45,000...a 50% increase in pay. One guy makes it the way I described above, another guy, time card, makes it by working 53 hours/wk with the 13 overtime hours being time & 1/2. End of the year...all else being equal, both face the same tax burden. If the tax burden is the deciding factor with the time card employee, say a forklift driver, then why would it not be a disincentive for the salesman...recently promoted from his forklift? Or do you believe it would?

Myself, I live to get into the next bracket...SHIT, I LOVE IT!! Hell, the next bracket is an incentive for me, lol. I want to gross more and take home more...and if that means I gotta kick up a little more to the "man"...so be it. But that's just me.

 

[Fortunato]

Re: Re: Re: Re: Re: This

I think the Laffer theory is a great example of exaggerating a concept to explain it (without having to get technical). If you make more money, you move into a higher tax bracket your effective tax rate will increase. As you raise the effective tax rate you add a disincentive to work. It's a simple concept.

And that's why you CONTINUE to be wrong about it. Current tax structures in nearly every economy do NOT "add a disincentive to work", as you say. Period. They may, at certain points, offer LOWER incentives, but there always incentive to work. You take one concept, intended to hypothesise an overall optimal tax burden, and you try to conclude something altogether different.

Economic Colonialism? It's called free trade in a world economy - much to the worlds benefit. The US economic success is due to...

Free trade is good, but America has never been so good at that sort of thing... you prefer "selective trade" (see: softwood, steel, etc.). But that isn't what I was referring to... no, your government, and many American companies, have been involved internationally with a number of various (often dubious) causes... certainly not in promotion of "trade". Don't get me wrong... good on you (well, except for the most dubious of the dubious). Acquiring assets and beneficial trading environments is an accomplishment, to be sure.

That said... nothing to do with tax.

Your other reasons for a strong economy:

Education: yes, you have very good higher education. Generally for the elite, mind you. You have poverty and illiteracy levels that are higher than most other developed countries, mind....

Efficient capital markets: Yes. But you are not alone in this regard.

Entrepreneurial environment: Possibly. But I don't know how you can measure this, let alone "claim" it... (mind you, facts or proof have yet to stop other claims...)

World's most efficient labour market: Not true. Asia's is more efficient... hence, the migration of work (that has everyone's knickers in a knot in Washington)

...but again.... even if we were to agree, what we are saying is that THESE factors were responsible for the accumulation of American wealth... this is STILL not an argument that tax policy has contributed.

But you can't forget that taxation is a disincentive to work, which is the basis for this thread.

You can keep saying it all you like... it still won't make it true.

Tax revenues as a percent of GDP were lower in Japan than the US (in 2000 for which I could find stats). Japan, even with pathetic growth rates until recently, is a very rich and productive economy.

Tax rates are higher in most European and Nordic economies, and they have the same "clout" that Japan would. Tax rates are lower in many Asian economies, Russia, Ireland, etc. They haven't conquered the world, economically speaking.

You claim Laffer's theory (never proven) is justification of low taxes (which it never intended to do), and yet no-where can we actually see causal evidence.

Taxation is a redistributor of wealth, but I believe it provides an incentive to do nothing and a disincentive to work, thus it would destroy wealth.

Do you really believe it? Or do you just like to say it? And, if it is really to encourage work, why are the tax brackets so high? Surely, at $200,000, we are no longer talking about income from working, but rather income from "property".

You prefer the Liberal slimeballs?

OTB

I am conservative by nature... but I hate liars and manipulators. If the case for a certain policy is valid, then it doesn't need "spin" and fabrications.

Low taxes (and low spending) are good because governments don't spend very well. It is not a panacea, or driver to Utopia.


Best regards,

F.

 

[tompeepin]

Re: Re: Re: Re: Re: Re: This

Myself, I live to get into the next bracket...SHIT, I LOVE IT!! Hell, the next bracket is an incentive for me, lol. I want to gross more and take home more...and if that means I gotta kick up a little more to the "man"...so be it. But that's just me.

Exactly, that is for you, some live to work; others work to live. I make more than enough money already. So now I am looking to buy myself some more time where I can work at what is fun for me, unfortunately it does not pay or I would be doing it full time.

 

[spartan5782]

Re: Re: Re: Re: Re: Re: Re: This

Exactly, that is for you, some live to work; others work to live. I make more than enough money already.

I hear ya peepin, but saying that you make enough and don't need any more is a lot different than sayin "I need more money, but I'll be damned if I pay more taxes on it". That was the only point I was trying to make.

A guy like myself, who can never make enough, would never look at additional taxes as a disincentive to working to reach his goals. Are there more guys like me than the complacent?? I'd hazzard a guess of yes. So, it is tough to make the blanket statement "going into a higher tax bracket is a disincentive to work". I think for most, including from what you just said, making life choices and being happy with where you are in life is a more determining factor.

JMHO

 

[onthebottom]

Re: Re: Re: Re: Re: Re: This

Your other reasons for a strong economy:

Education: yes, you have very good higher education. Generally for the elite, mind you. You have poverty and illiteracy levels that are higher than most other developed countries, mind....

We have the second highest Collage educated population (next to Japan) as a percentage of population. I don't know how that is elite? (Economist Jan 22, 2004)

Entrepreneurial environment: Possibly. But I don't know how you can measure this, let alone "claim" it... (mind you, facts or proof have yet to stop other claims...)

Entrepreneurs as % of people age 18 - 64 (Economist Jan 8, 2004)

US 11.9%
Briton 6%
Germany 5%
Japan 3%
France 2%

World's most efficient labour market: Not true. Asia's is more efficient... hence, the migration of work (that has everyone's knickers in a knot in Washington).

I'm at a loss for a statistic to refute this. If you said labour is cheaper in Asia I would agree, but more efficient, I don't know.

Do you really believe it? Or do you just like to say it? And, if it is really to encourage work, why are the tax brackets so high? Surely, at $200,000, we are no longer talking about income from working, but rather income from "property".)

The US top bracket isn't that bad, especially give you can deduct mortgage interest payments (and many other things) from the taxable income.

Most of the people I work with make more than 200,000 in income (USD) per year. So yes, we are talking about income. There is the complication of how to treat capital gains and dividends but this is another debate (tax the rich vs double taxation)


OTB

 

[tompeepin]

Re: This

So, it is tough to make the blanket statement "going into a higher tax bracket is a disincentive to work". I think for most, including from what you just said, making life choices and being happy with where you are in life is a more determining factor.

JMHO

I doubt that anyone made that direct blanket statement. It was more the general theory that:

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.

Yes you are right in that the exact point on this scale where motivation is killed is an individual choice.

jimjam was just looking for exact calculations so that he could make that choice for himself.

BTW how many hours a week do you work? I am sure that if you wanted to you could work even more ... and make even more money. Get to it, WTF are you doing here? Money awaits!!!

 

[spartan5782]

Re: Re: This

I doubt that anyone made that direct blanket statement. It was more the general theory that:

Actually, I believe I quoted OTB 3 times with a pretty definite blanket statement....

BTW how many hours a week do you work? I am sure that if you wanted to you could work even more ... and make even more money. Get to it, WTF are you doing here? Money awaits!!!

LMAO!!! I'm actually salary, so no overtime for me. But I would love to take my boss' job, VP, and move up to the next bracket. Remember, it's not about the hours...it's all about the taxes...lol.

 

[Fortunato]

Re: Re: Re: Re: Re: Re: Re: This

Most of the people I work with make more than 200,000 in income (USD) per year. So yes, we are talking about income.

...this may be true... but, this is also the top 1-2 percentile of earners. My point with this was that if it is stictly a matter of providing incentive, this bracket can be moved much much lower, and not affect 98%+ of the population (and, let's face it, how much more "productive" can they be?)....

Best regards,

F.

P.S. My phrasing of "elitist" w.r.t. your education system was inaccurate in explaining my point... you do, indeed, have some fine schools... and, with or without them, there are an abundance of very bright people in your workforce, which has most certainly benefited your economy. Still, there is an effective economic screen on many of your better institutions (even with quotas and aid considered), and many of the other schools... well, all I have is a few handfuls of anecdotal evidence, so I'll confess to a certain "perception" bias, and retract the charge....

 

[onthebottom]

Re: Re: Re: Re: Re: Re: Re: Re: This

...this may be true... but, this is also the top 1-2 percentile of earners. My point with this was that if it is stictly a matter of providing incentive, this bracket can be moved much much lower, and not affect 98%+ of the population (and, let's face it, how much more "productive" can they be?)....

But remember that it's a very small number of people who pay a majority of the taxes. In 2001 for instance 800 people paid 25% of income tax in the US. 800 out of 280,000,000. The top 1% pay 30% of tax and the top half pay 90%. So from a tax revenue perspective you only need to consider the top 25% or so. This in a country were percapita GDP 40% higher than the EU and Canadan incomes.

Best regards,

F.

...
P.S. My phrasing of "elitist" w.r.t. your education system was inaccurate in explaining my point... you do, indeed, have some fine schools... and, with or without them, there are an abundance of very bright people in your workforce, which has most certainly benefited your economy. Still, there is an effective economic screen on many of your better institutions (even with quotas and aid considered), and many of the other schools... well, all I have is a few handfuls of anecdotal evidence, so I'll confess to a certain "perception" bias, and retract the charge....

We do have the best schools, and one of the reasons is becasue of how our education system is run. The economist did an interesting study on this as Briton was looking at charging students to attend schools (the horror). I'll leave you with one fact that is a bit dramatic: Harvard's endowment is 3 times larger than all the endowments for all the schools in the UK.

The entire university system in the US, not just the Ivy League schools, is very very good. The best and the brightest come to the US to go to school, many of them stay and add to our competitive advantage. 50% of PhD students in the US are from other countries. Talk about a brain drain (not that they all stay, but I'd be willing to bet a case of Moose Head that many of them do).

OTB