Taxing The Rich Incentivizes Working Less
This is the sort of thing that happens when you punish (tax) productivity (income):
Eighteen months after being laid off, Judith Lederman, a 50-year-old divorcee who lives in Scarsdale, N.Y., is ready to consider jobs paying half the $120,000 she earned as a publicity manager at Lord & Taylor. That’s mostly because she’s desperate, but it also makes sense when you consider how this country punishes work effort. While the first $60,000 of her income would be lightly taxed, the next $60,000 would be hit with what is in effect a 79% tax rate. Given a choice between a part-time or easy job paying $60,000 and a demanding, stress-ridden job paying $120,000, Lederman would be wise to take the former. In the tougher job she would be contributing twice as much to the economy. But she wouldn’t be doing herself much good. It would make more sense to take it easy and spend more time with her high school senior daughter, Casey.
I know it’s counter-intuitive, but thanks to the obscenely complicated nature of our tax code many people who have the potential to earn a six figure salary would be better off not earning it. Because once they get above a certain income level most of the additional income they earn goes to the government.
Now, obviously, for the super-rich this may not matter. But for someone making $60,000 instead of $120,000 a year it’s a big, big difference.
But why should that be so? Do we really want to live in a nation where productivity and success is so punished as to almost make that productivity and success not even worth it?