ABC News reports on some poor souls who currently make more than $250,000 a year and are contemplating ways to reduce their income to avoid the Obama administration’s proposed top-bracket tax increases.

A 63-year-old attorney based in Lafayette, La., who asked not to be named, told ABCNews.com that she plans to cut back on her business to get her annual income under the quarter million mark should the Obama tax plan be passed by Congress and become law.

So far, Obama’s tax plan is being looked at skeptically by both Democrats and Republicans and therefore may not pass at all.

“We are going to try to figure out how to make our income $249,999.00,” she said.

“We have to find a way out where we can make just what we need to just under the line so we can benefit from Obama’s tax plan,” she added. “Why kill yourself working if you’re going to give it all away to people who aren’t working as hard?“

Why? Well here’s a a reason, Ms. LouisianaLawyerPants: Because you’re a greedy shitbird living in one of the poorest states in the country, and your tax money goes for some kind of useful things, like schools, roads, hurricane monitoring, and the fucking Army Corps of Engineers, who recently saved you from drowning in your own damned basement. (I know Lafayette isn’t New Orleans. My point remains.)

Oh, and people who don’t make as much money as you are still working hard, you asshole.

Also, do you and ABC News even know how income tax works? Media Matters would like to explain it to you.

The ABC article is based on the premise that an individual’s entire income is taxed at the same rate. If that were the case, it would be possible for a family earning $249,999 to have a higher after-tax income than a family earning $255,000, because the family earning $249,999 would pay a lower tax rate.

But that isn’t actually how income tax works.

In reality, a family earning $255,000 will pay the higher tax rate only on its last $5,001 in income; the first $249,999 will continue to be taxed at the old rate. So intentionally lowering your income from $255,000 to $249,999 is counter-productive; it will result in a lower after-tax income.

To be fair, the ABC piece does mention that the one way this strategy could pay off would be if your new tax bracket raises the value of your deductions, which is something Obama has proposed.

But ABC doesn’t want to dwell on that boring bit of sense, they’d rather move along to the last big, bold section header, “Does Obama Tax Plan Promote Class Warfare?,” and close with a Colorado dentist declaring that he is “already over-taxed” and he works ever-so-hard, and it’s JUST NOT FAIR.

Anthony Hecht is The Stranger's Chief Technology Officer. He owns no monkeys.

65 replies on “Help, I Make Too Much Money!”

  1. While I don’t dispute this woman is a lazy shit-head (they breed like rabbits down south), as a native Louisianan, I have to tell you we don’t really put much belief in this whole “basement” thing. The problem being, if you try to dig a basement in Louisiana, all you’ll end up with is an indoor pool underneath your ground floor.

    When our people get trapped and drown in their houses, it’s in their attics.

  3. “Why kill yourself working if you’re going to give it all away to people who aren’t working as hard?”

    So… isn’t this basically the argument for socialism? I mean, in the sense that most wage slaves are expected to work their asses off for a flat rate while profits go to the putative “bosses” or owners, who don’t work at all — or who work much less — in exchange for the money they make off the business? Or, like, all the people who work at companies where the CEO makes 100 times more than they do for easier work and, often, less of it?

    Just funny that someone making $250k would pitch that argument as an argument against taxes. Funny in the sense that she’s kind of an idiot who doesn’t see the irony.

  6. I make a decent amount of money, and I can tell you with certainty that I don’t work as hard as most people who make less than I do (uh, as evidenced by the amount of time I can spend on Slog).

    Yes, I may work a lot of hours, and yes my job may be stressful at times, but it does not qualify as “hard work”. Any lawyer or investment banker or consultant who doesn’t recognize that is a moron.

    Also, thanks for the rant on how income tax actually works, that’s what I was yelling in my head when I read the ABC piece.

  8. Most high incomes come from a combination of luck and uncompetitiveness in the marketplace. Hard work only gets you so far and talent only a little bit farther.
    By their very nature most high incomes are inefficient, remunerating resources at a much higher rate than they should be worth.
    Higher taxes on higher incomes is the small price rich people pay for their being tolerated at all.

  9. One more thought – I’m pretty sure any lawyer/banker/consultant who says they work so much harder than other people has never done a day of actual “real” work in their lives. I worked in a factory in college (and waited tables), and even if factory work paid more than what I do now, I would still pick my current job. Hands down.

  11. This lady may not like paying income taxes, but at least she’s paying taxes on actual work. People are getting distracted by her appearance of stinginess, but if you really want to go after rich people who don’t pay enough taxes, rant about hedge fund managers who take 20 percent of profits and 2 percent of assets every year and only pay half the captial gains taxes they were before the Bush years.

  12. Well, I’m reading this at work and it is, in fact, the US Army Corps of Engineers. No fucking here, folks – there are not many attractive federal employees. Your friendly neighborhood Corps employee.

  14. Yeah, that’s why people make less money. They don’t work as hard as her. If only I worked harder.

    Let me see if I have this clear. Top rates now are around 33%-35%? Obama’s going to roll back the Bush tax cuts bringing it to 38%-39%? I’m unclear which of these 4-5 percentage points is the socialist one.
    http://www.truthandpolitics.org/top-rate…
    http://www.taxpolicycenter.org/taxfacts/…

    Tell you what. All the conservatives seem to agree that Regan had the right idea right? He’s the Republican messiah right? Well let’s go with his plan then. For most of his time as POTUS taxes were 50% and that started at between $100K and $175K. Sounds a little harsh but hey, he’s the Republican messiah, he can do no wrong so his tax policy must be right. Let’s do it.

    Interesting to note that we’ve currently got the lowest taxes on the top earners since Bush I but before that we haven’t seen anything near where we’re at now since 1931.

  17. Jesus Christ. Let them join the local laborers’ union and dig ditches for $25 an hour. That’ll bring their incomes down, and they’ll be too tired after work to bitch about taxes.

  18. I am not sure that this is all about marginal rates. I believe some of the effects (such as lessening of the mortgage interest and charitable deductions) apply to the full income and kick in after 250K (or whatever) of gross income. In those cases it would make sense to limit one’s productivity to stay under the wire.

  19. So why can a billionaire deduct the interest on their house worth $10 million when they’re not in danger of being forced to live in a van down by the river?

    And what’s up with them not paying Social Security or Medicare insurance like the rest of us anyway? Once they make more than $105,000 (or thereabouts) they stop paying.

    It’s INSURANCE. They go broke too. Why the cap on earnings?

  22. “…and it’s JUST NOT FAIR.”

    So just out of curiosity… At what maximum rate should earnings after $250,000 be taxed and why? (Not based on what programs it could pay for but on what IS FAIR to the earner.) Or should the government just confiscate every dollar after $249,999?

  24. Even worse than the whole marginal tax issue Media Matters points out (that it’s only the excess income above the threshold taxed at the higher rate) is the fundamental idiocy of claiming all your excess dollars are taxed. Short of a 100% tax rate, that’s never true.

    I hear this all the time from conservatives, who say that higher tax rates cause people to work less hard for the extra money. Really? So if the tax rate on income above $250k is 50%, I’m not going to take a job that pays $50k more because I’ll “only” take home $25k (vs. $35k under a 30% tax rate)? I’m going to forgo $25k in income because it might have been $10k higher under a different president?

    I’d buy it if the top tax rate was 80-100%, but anywhere south of that, the extra money is always worth it, and anyone who thinks otherwise is an idiot.

  25. @9: “hard work” is not to be confused with “valuable work,” which is why bankers typically make more than landscapers.

  27. I actually saw Marilyn vos Savant (The Smartest Woman in the World!) make this very mistake (assuming that marginal tax rates apply to the entire income) in her column in Parade magazine several years back. I don’t believe it’s stupidity or ignorance, I think it’s just their susceptibility to Limbaugh-style truthness. These folks actually believe that Obama is a Muslim socialist because their world view tells them that he must be.

  29. @25 – yes, exactly. Based on my education, intelligence (I’m not being classist here — being smart allowed me to get this job and be very good at it), and (as @8 pointed out) a good deal of luck, I have a well paying job that is more “valuable” to society than, say, a landscaper.

    So, yes, I get paid more because someone with my skills and knowledge who’s really good at what they do is extremely rare in the labor market. But, that doesn’t mean I work harder. And neither does lawyer lady in this article. Her “I’m working harder than those people” attitude is just really irritating to me. I’m eternally grateful that I am where I am today — people like her just seem to have a maddening entitlement problem.

  30. @19 & @26

    Social Security is not INSURANCE. It’s actually (more accurately) a TRUST FUND.

    Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss. An insurer is a company selling the insurance; an insured is the person or entity buying the insurance. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

    In common law legal systems, a trust is an arrangement whereby property (including real, tangible and intangible) is managed by one person (or persons, or organizations) for the benefit of another. A trust is created by a settlor, who entrusts some or all of his or her property to people of his choice (the trustees). The trustees hold legal title to the trust property (or trust corpus), but they are obliged to hold the property for the benefit of one or more individuals or organizations (the beneficiary, a.k.a. cestui que use or cestui que trust), usually specified by the settlor, who hold equitable title. The trustees owe a fiduciary duty to the beneficiaries, who are the “beneficial” owners of the trust property.
    You may appear to be more intelligent if you can master the difference between the two.

    U.S. Social Security is a social insurance program funded through dedicated payroll taxes called Federal Insurance Contributions Act (FICA). Tax deposits are formally entrusted to Federal Old-Age and Survivors Insurance Trust Fund, or Federal Disability Insurance Trust Fund, Federal Hospital Insurance Trust Fund or the Federal Supplementary Medical Insurance Trust Fund. The main part of the program is sometimes abbreviated OASDI (Old Age, Survivors, and Disability Insurance) or RSDI (Retirement, Survivors, and Disability Insurance). When initially signed into law by President Franklin D. Roosevelt in 1935 as part of his New Deal, the term Social Security covered unemployment insurance as well. The term, in everyday speech, is used to refer only to the benefits for retirement, disability, survivorship, and death, which are the four main benefits provided by traditional private-sector pension plans. In 2004 the U.S. Social Security system paid out almost $500 billion in benefits. By dollars paid, the U.S. Social Security program is the largest government program in the world and the single greatest expenditure in the federal budget, with 20.9% for social security and 20.4% for Medicare/Medicaid, compared to 20.1% for military expenditure. Social Security is currently the largest social insurance program in the U.S., constituting 37% of government expenditure and 7% of the gross domestic product and is currently estimated to keep roughly 40% of all Americans age 65 or older out of poverty.

    A worker’s retirement income benefit is based on his Primary Insurance Amount, or PIA. The PIA is the average of the highest 35 years of the worker’s covered earnings (before deduction for FICA). Covered earnings in any year are limited by that year’s Social Security Wage Base, the maximum earnings that could be subject to the OASDI portion of FICA payroll tax ($102,000 in 2008). If the worker has fewer than 35 years of covered earnings, zeros are used to bring the total number of years of earnings up to 35. Years of covered work more than 2 years before the year the worker turns 62 are indexed upward to reflect the increase in the national wage via the average wage index (AWI) from the time at which the earnings were covered in the past to the value of the AWI two years before the worker turns 62 (which is the most recent year available at the date the worker turns 62). One-twelfth of this 35-year average is the average indexed monthly earnings (AIME). The PIA then is 90% of the AIME up to the first (low) bendpoint, and 32% of the excess of AIME over the first bendpoint but not in excess of the second (high) bendpoint, plus 15% of the AIME in excess of the second bendpoint. Bendpoints designate the point at which the rates of return on a beneficiary’s AIME change. In 2008, the bendpoints for calculating the PIA are a change from 90% to 32% at $711 and a change to 15% at $4,288. This PIA is then adjusted by automatic cost-of-living adjustments annually starting with the year the worker turns 62. Similar computations based on career average earnings determine disability and survivor benefits. These alternate computations average less years of earnings when the worker dies or is disabled before age 62 and use different base years for the inflation adjustments.

    Please note that increasing the maximum earnings that could be subject to the OASDI portion of FICA payroll tax would result in a corresponding increase in PIA and, subsequently, an increase to the worker’s retirement income benefit.

    In other words, if the government makes them pay more in, the government will have to pay more out to them. (If I were a cynic, I would assume the maximum earnings subject to the OASDI portion of FICA payroll tax are determined using actuarial tables with the intention of limiting large payouts to wealthier people who on average live longer.)

    Now, @26, if you please, what in your opinion is the maximum level of taxation (after $249,999) that is “Fair” to the earner and why?

  31. @30 – no, it’s insurance. Against you losing all your money when Bernie Madoff rips you off.

    Or you get found out for stealing from your bank.

  32. God we already live in a pseudo socialism. My reward for being an “elite” to perhaps give more to humanity is to be in ass loads of debt to the government. So I pay back the tax dollars used to get my ass out of skid row … and end up breaking even …

    And work my ass off as a post doc! I’m not so much bitter, it’s life. Just fuck this bitter bitch because she thinks she is better than me because she works harder!

    And as a scientist, I bring something more valuable to the table.

    In hindsight, if I wanted money … I should have just played the bull shit card, and gone into business. Instead I will forever answer to people who have no understanding of what I do for a living, yet want to sell it.

    I guess … it’s too late we already live in a pseudo socialism. We in the states, and not calcuta. But I guess being from Louisiana, they are more acustumed to gutter trash litering the streets with their disenfranchised corpses.

    Rough day at work. I think I’m just steamed about this “I work harder and thus get more money argument!” Become a scientist, then we’ll talk.

  33. @31 – Your wrong.

    You don’t have to suffer a loss to collect social security. You only have to be a certain age. My parents have retired, are wealthy, continue to earn large incomes off investments, yet still cash Social Security checks (which they use as mad money for extra travel).

    If it were Insurance, it would only pay in the event of a loss.

    Try harder please.

  36. @30: As you note, Social Security includes disability and survivor benefits, which are commonly considered insurance. Your definition of insurance seems to be too narrow; it appears to exclude, for example, what is commonly referred to as life insurance.

    As you concede in your fourth paragraph, Social Security is a social insurance program, which seems right. Part of what Social Security insures is not individuals, but our entire society from having to endure the spectacle of senior citizens and the disabled eating cat food in unheated attics.

    As to your substantive critique, yes, if the salary cap were higher, the government would pay out more in benefits; the point is to collect more than is paid out, and given the skew in benefits to lower earners, raising the salary cap would do precisely that.

  37. @35,

    That copy-and-paste job could have been summed up in a couple of sentences. The fact that you chose copying and pasting rather than summing up Social Security in a paragraph indicates that, no, you didn’t know how it works up until Go Away, Batin’ challenged you.

    Try again.

  38. @36

    Possibly “insurance” (as in assurance) but not (capital “I”) “Insurance”.

    Again, Insurance protects against a Loss and only pays out if a Loss is suffered. SS does not require its primary recipients (the elderly) to prove a Loss in order to collect Benefits. In other words, Gramma would have to prove that she’s eating cat food and living in a attic (or in peril of such) prior to collecting cent one. SS, however, pays out regardless of Loss (or even need). Bill Gates will be able to collect his full Benefit regardless of how many billions he keeps or loses. If SS were an “I”nsurance program, we would pay Premiums and collect Claims. We don’t. We do however collect Benefits as does any other Trust Beneficiary.

    And because of the calculation, the cap limits what individuals pay in and what individuals draw out. If you raise the cap on what the individual pays in, it also be raises it on what that individual draws out.

  40. What else do you expect from a generation or two who were told all their lives that self-indulgence was the way to happiness? That they should find their “bliss” or, alternately, that money can, in fact, buy happiness?

    Fuck you, Dr. Spock. Fuck you SO HARD, along with all your childishness-indulging contemporaries. Thanks to you we now have a generation of aging infantiles and their ugly progeny, none of whom ever learned a lick of self-discipline or altruism.

    Fuck. Fucking Baby Boomers. Fucking… fuck.

  42. @37

    You have no idea what I do or do not know, so kindly do not suppose that you do. (It really only makes you seem childish, and its irrelevant to debating the points.) I’ll extend you the same courtesy.

    I do know that I could have spent twice as long summarizing something (something that I have understood perfectly since I started paying into it 22 years ago) which 19 & 26 should have already understood, or I could just cut an paste an existing summary. I chose the later.

    Admittedly, I could have put in links (but I never follow them) and I should have cited source (but I was about to be late for a meeting (and its a bitch Sloging from a cell phone).

    I am, however, still curious to know what the consensus here is as to what the maximum level of taxation (after $249,999) that is “Fair” to the earner is and why?

    Its not a loaded question. I’m just trying to understand how much you (Slog) thinks is “fair”. I’m guessing that its somewhere between 30% and 100%…

    What do you think? Where would you draw the line (out of fairness)?

  43. It really only makes you seem childish…

    That’s rich coming from you, especially with your obsession over “fairness”. It’s not FAAIIIRR!!!!! Go cry to your mommy.

  44. You_Gotta_Be_Kidding_Me

    I think we could fund the entire stimulus package with your contribution of the slogs proposed piouty tax.

    Who ever said life is FAIR! Fair has little to do with anything. It’s something to persuit but never actually achieved. But we still must have a society that functions! And let’s face it, totally pampering to those that had a head start in life does not make society “function” But because they piss and moan and have a foot jammed into the door, we compromise, make amends and society “functions” just fine. Turns out many of these compromises help us out in the long run.

    So we you make too much money … There are loop holes, trusts, etc. etc. that encourage you to dare I say invest your money, and protect it from taxes. Then you can stand to earn more money, put more people to work. Or you can piss and moan because your high class salary of Louisiana pales in comparison to the high class salary of wall street (which I saw in Oregon aristocrats all the time.) The impetus is to put it back into the market, hopefully make some gains and not just sit on it and wait for things to get better. This helps society function, and gets shit built.

    And apparently, if you are business tycoon, and SHIT really hit the fan and you have to take stimulus money?

    You get 400K a year, and that is BAD. Can you honestly say you wouldn’t turn down 400K a year even if it put you in a higher tax bracket?

    Boo-fucking-hoo

  46. This woman is better off than 90% of Americans and 99.9% of all human beings on this planet and she’s complaining?

    Do you know what the end result of a rich-poor gap is? The rich guy’s head on the head of a pike. Taxes are social insurance against that happening.

  49. Fucking whiners who need to be fucking cut down to size. I hate rich people. I hope they all get taxed back down into the middle class where they fucking belong- where we ALL belong.

  50. fine bitch. You go ahead and reduce your income to $249,999

    And we’ll take the cap off of Social Security.

    Eat it, worthless cunt.

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