Quote:
Originally Posted by AOII Angel
No they wouldn't. You won't take home more money in a lower tax bracket. They are being taxed the same on the income up to that 25% tax bracket level. The income over is then taxed at a higher level. You CANNOT make more money by making less. This is the fallacy. I'm in the 1% already and know people in the 1% so I'll tell you that no one is going to stop making money so they can stop paying taxes. They may find a way to get out of paying taxes, but no one is going to stop making money. Period.
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Yes, I knew that it didn't work that way in reality, but I understood the theoretical example to exist in a imaginary world with straight income breaks. The imaginary choice, as I understood it, was to be taxed at 25% of present pay or taxed at 50% of a 1%er's salary. In that kind of system, you'd see weird things happen at the thresholds between brackets. I totally know that's not what we've really got.
I also want to make clear that I wasn't claiming that people in the 1% would take home more money by having a lower income overall.
I think the folks talking about higher earners choosing not to max out salary-wise are saying that if they aren't going to net as much over a certain point, that perhaps they value the additional time they would gain not working more than the lesser amount of additional pay.
[ETA: I'm restating this another way: the choice isn't so much about making less because of taxes or what the rates themselves do to take home pay; it's about re-evaluating the opportunity costs of additional work in light of paying higher taxes on payment for that additional work. Someone who has this much control over their workload is pretty exceptional for reasons other than income, IMO.]
That's a plausible position to me, but it still means they will forgo some additional income which means they can't be spending that additional income in their local economy.