Explanation of taxes.

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jer72981m on December 8th, 2021 at 13:48 UTC »

Yeah people also think a tax refund is the government paying them. It was your money, they're just giving it back. Lol

GeeSlim1 on December 8th, 2021 at 14:28 UTC »

It’s fucking insane the number of people who have said to me they don’t want to earn over £40,000 because they will lose money….

Edit; Jesus Christ my inbox. The example is in £ as I am referring to UK tax payers. The fact that other in countries people lose their healthcare entitlement which costs them thousands of dollars is a completely separate matter

badass_panda on December 8th, 2021 at 14:41 UTC »

At least in the US, I can understand why so many people don't get how marginal tax brackets work:

It doesn't come up. A lot of workers have spent their whole lives in the 2nd tax bracket (median individual income is ~$37K, the bracket starts at $9K and ends at around $43k). They don't notice it. Taxes come out of their paycheck before they receive it, and at the end of the year they get a refund; Turbotax (or whatever) does all the math for them. It fits a narrative. Often, the people who repeat this trope don't need to genuinely believe it to want to say it. What they mean is, "I could be earning more if I wanted to earn more, but I don't because the government would only take all my earnings." If it wasn't this excuse, it'd be a different excuse. They're conflating benefits with taxes. A 'benefits cliff' is when parts of the social safety net intended for low income earners have a hard eligibility cutoff. For example, a family of four earning less than $46k is likely eligible for subsidized housing (~$500 a month) and SNAP (food stamps, ~$650 a month). For these folks, getting a $5K raise that puts them over the threshold could cost them $14K.

That last one is the biggie -- it's not taxation that's causing the 'cliff', but there is a cliff for low income people (at least in the US), if they're receiving low income benefits. The wealthier someone is, the less likely it is that that cliff is what they're talking about, and the more likely it is that they're just ignorant, willfully or otherwise.