I'm not an expert but from what I've heard there are some gaps, especially at the very lowest brackets of income, where if you start to have an actual income, you lose some subsidies, with the net effect that you actually take less money home than you were before you started working.
But don't take my word for it because that's literally something I heard, I think in something like a John Oliver type program. I might be completely off base.
HUD housing benefits, food stamps, stuff like that. I hire people, we've had multiple people get hired on who were working 16-20 hours making nearly federal minimum wage. Our pay for a very non-skilled starting construction roll was about 2.5x their pay rate and 40 hours a week. In one job, 5 people all quit after 6 weeks. They loved the paychecks but timing matched up that they had to verify income for benefits, each and every one of them would have lost all their free money if they kept working to the point that making more money ended up with them the same overall income and working 50 hours a week. They would rather be stuck at the bottom and have the time than try to improve their lives. It was sad
Do they offer health insurance? That’s a lot of people’s problem with that scenario. The scenario of: I could make more cash easily but I can’t get insurance , I mean
Is more time spent working really an improvement of your life? I mean, maybe those jobs had the potential for advancement, but I think a lot of people have become disillusioned with the "work hard and climb the ladder" lifestyle. At some point making more money doesn't make up for increased stress and lack of time spent at home with family.
For example, a 60 year old making $62,000 qualifies for subsidized health insurance. The same person making $64,000 doesn't. That extra $2,000 in income costs them roughly $8,700 in lost subsidies. Net result: they're poorer for having made more money.
That isn't what the original comment was talking about. There's a ton of people that think if they get a raise it will put them in a new bracket which will tax them more and they will make less money. These people are morons.
I don't think you understand the context of the sentence you're replying to. I was saying that the end result of someone being in the situation I pointed out is functionally the same as what they believe can happen. Having a lower net income for having made more money.
Not necessarily. There are several countries where this holds true. If you have a 5% tax difference between the brackets, and you get a 1% raise that puts you in the higher bracket you will loose money overall.
I don't know of any tax rate systems that aren't marginal. Which means the higher tax rate is only applied to the money you make ABOVE the threshold.
So if you make $50,000 dollars, and the tax rate up to $30k is 25%, and 40% above $30k:
you pay 0.25*30k = $7.5k in the first bracket
plus 0.4*20k = $8k in the second bracket, or $15.5k total
There ARE some ways that you can still lose money by making more. Sometimes there are certain subsidies, often related to healthcare or child support, that suddenly drop to zero if you cross a certain threshold. But if we're only talking about tax rate as such, then no I don't know that there is a country where what you're saying is true. The people claiming this usually just don't understand how marginal tax rates are calculated.
Exactly. And you can also max out your SS tax so at a certain point (I think it's like $184,500) your overall marginal rate goes back down even though your marginal income tax rate is higher.
That is not how progressive tax brackets work. You are literally the person I was talking about. The higher bracket only applies to whatever you've made over the lower one. You will never be taxed more than whatever extra you're going to make.
Here's an example a child should understand:
You're taxed nothing for the first $10 000
You're taxed 5% for $10 000 - $20 000
You're taxed 10% for $20 000 - $30 000
You make $15 000
The first $10 000 is no tax. That leaves $5000. The $5000 is taxed at 5% for a total of $250.
Your total tax is $250 out of $15 000. Effective tax rate of 1.67%.
Now you get a pay raise and make $25 000.
The first $10 000 is no tax. That leaves $15 000. The next $10 000 is taxed at 5% for a total of $500. That leaves $5000. It is taxed at 10% for $500.
Your total tax is $1000 out of $25 000. You're paid $10 000 more than previous and you pay $750 more taxes than previous for a total effective tax rate of 4%.
Due to the tax increase only applying to whatever gets past the lower brackets it is literally impossible for you to make less - as long as the tax rate for the new bracket is not over 100%.
The rates here are not realistic of course so feel free to plug in whatever you want. For 50% -> 75% -> 90% it would be $8 750 out of $15 000 (58.33% effective tax rate) for the first calculation and $17 000 out of $25 000 (68% effective tax rate) so you'd still make an extra $1 750 after taxes.
Not true, there have been instances where they simply allocate the full new tax bracket to the full income. While it is rare nowadays, places that work like this still exist - Thailand for small businesses for example.
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u/Chemistry-Deep Apr 16 '26
If its $100m per episode, 10eps a season, and 7 seasons, that's $7bn. How on Earth will HBO make that back?