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?
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Exactly, why work? I own a small business with my son, my wife and three employees. After January 1st we will cut back the business so that we can lay off the employees and only direct family members will be employed. We have worked this out with our CPA and he says we would be fools to continue the way we are.
ReplyDeleteI'm sure there are plenty of folks that would like to have his predicament. i.e. make close to 250K per year. Don't think I would turn down a raise and promotion even if it did mean higher taxes.
ReplyDeleteSounds like a very smart young man who is capable of adapting to the economy.
ReplyDelete5:27 is full of crap
ReplyDelete5:37, I doubt there are many folks who would take a raise and a promotion when it means they will have less disposable income than someone making under $250,000/yr.
ReplyDeleteIt's a no brainer-and the only intelligent thing to do, when you have student loans, etc.
Having much less disposable incomes than someone making 10's of thousands less, is going to happen (not maybe going to happen, but IS going to happen) to alot of people living in states w/already high tax rates.
If we had a president with a functioning brain people wouldn't have to worry about this and could concentrate on bettering themselves and advancing in their career choices.
I don't know about that 6:14 because a friend of mine who is in a service type of business is going to lay off their 10 employees. They make approx $4000/per employee/per year. If all the talk about taking away deductions for things such as supplies, etc happens they have no choice but to lay off. You need to stop fooling yourself and see what's going on in the real world because you are severely ill informed.
ReplyDelete6:14 obviously does not own a small business in Maryland. There is no incentive to have employees. Most, if they can, will hire people as independent contractors or just pay them cash. This current environment has driven some businesses underground. And I can't say I blame them. You have to do what you have to do.
ReplyDeleteI sure wish you folks would reconcile your views with the facts.
ReplyDeleteIf this fictional "kid" is facing potential tax increases, he's making over 178k a year. I doubt he's struggling, especially since he doesn't own a home. On top of that, I didn't hear about too many of these folks struggling during the 90's under those same rates when the economy was expanding and the labor participation rate was higher than it's been since prior to the Bush recession.
Oh please 6:29. Just what are the facts then? No need to respond-obviously you are just another one who hates the truth.
ReplyDeleteI wonder who he voted for. Maybe he deserves to be punished.
ReplyDeleteMaybe I'm wrong, but it was my understanding that the higher tax rates would apply to income in excess of 250K per year. Lower rate on first 250K and then higher rate on any income above 250K.
ReplyDeleteWhat everyone misses is that he still has the low rate up to 250000. Only pays the higher rate on the money above 250. So if he make 300000 the higher rate only applies to 50000. So he would pass up the extra money?
ReplyDeleteYou would have to be a fool to think it was a good move.
Stepping over a dime to pick up a penny.
ReplyDelete7:59. Exactly
ReplyDeleteI wish I could count the times that the guys that work with my husband have said they will not work overtime because they take to much out in taxes if they do. These are the same people that say they need the money. Even if it does put you in a higher tax bracket for that paycheck you still make more money in that paycheck.
ReplyDeleteAnd no SS over $110k so what not a win win?
ReplyDeleteI wish I could count the times that the guys that work with my husband have said they will not work overtime because they take to much out in taxes if they do. These are the same people that say they need the money. Even if it does put you in a higher tax bracket for that paycheck you still make more money in that paycheck.
ReplyDeleteDecember 10, 2012 8:38 PM
They are probably correct. I used to work doubles. ONce I did 5 doubles just to see if I could.
The taxes they took out made it not worth it to work.
Sure I made more money but what good is it if it goes to taxes instead of my pocket.
Two doubles a week seemed to be the optimum over time level. I got more of what I worked for.
All these corporations and companies threatening to lay off full time employees and replace them with all part time employees isn't going to help their business.
ReplyDeleteHow is a company, lets say Red Lobster, to sustain business with no long term employees commited to exceed expectation, quality, service and product?
What happens to quality and expectations? Having a revolving door of untrained, poorly executing staff is a recipe for failure.
Most businesses consider the training involved to get their employees above and beyond the call of duty, is the most expensive part of hiring anyone.
With the revolving door of part time employees, how can they even think they will give consistancy and put out a good product?
Anyone who works on commision knows you dont have to make 250k to be taxed at the higher rate. Each check is taxed like that off the top, so you have less disposable income until you can get your tax refund. Unfortunately the top .1% is exempt one way or another so the economy fizzles by design.
ReplyDelete