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Math for Grownups
The source of the USA Today's preposterous advice?
A book titled "Math for Grownups." I kid you not.
 
According to USA Today:
That raise actually might not be as good as it looks. The extra money is nice, but it could very well bump you into the next tax bracket, possibly leaving you with less money than you had before the raise.

Dean Baker, Jon Chait and Matthew Yglesias marvel at the sheer stupidity of those two sentences; the whole point of marginal tax brackets is to make sure that even as you pay a higher percentage of your income in taxes, your net income continues to grow.

USA Today has now posted a clarification, but instead of admitting that they were wrong, they've dug in their heels, posting several pages from their original source, a book written by Laura Laing which they say offers a more "complete explanation" of the concept they were trying to convey. According to the book, appropriately titled Math for Grownups, a raise is "not always" a good thing:

Getting a raise is always a good thing, right? Well, not always. If that extra cash in your paycheck bumps you into the next tax bracket, you could be giving more in taxes to Uncle Sam than you'd like.

Okay, so "giving more in taxes to Uncle Sam than you'd like" is a meaningless statement, but getting a raise is "not always" a good thing? That's absurd! Of course it's a good thing, at least if money is your bottom-line. Otherwise Sarah Palin would never have quit her job as governor.

But Laing argues that instead of seeking a raise, you should make a counteroffer. Based on this logic, you'd think she'd advise you to ask for a ten percent pay cut, but she's not quite that crazy. Instead, she suggests "asking for another week of vacation" or a requesting a "VIP parking space."

Of course, if the parking spot actually has real cash value, then it's a benefit—and must be reported to the IRS. Which means it'll get taxed as if it were income. So if you follow her advice, you might end up with higher taxes even though you didn't get a raise. But at least you'd have a VIP parking spot. And you'd have the pride of being the mathematical adult in the room.

Originally posted to The Jed Report on Tue Sep 06, 2011 at 11:55 AM PDT.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement, In Support of Labor and Unions, and Daily Kos.

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Comment Preferences

  •  The Mind Boggles and (26+ / 0-)

    Photobucket

    -6.25 -7.08 The glass is neither half-full nor half-empty. The glass is just twice as large as it needs to be. If you play Microsoft CD's backwards, you hear satanic things, but that's nothing, because if you play them forwards, they install Windows.

    by Unit Zero on Tue Sep 06, 2011 at 11:59:49 AM PDT

    •  No kidding (9+ / 0-)

      Do these idiots think everyone should work for minimum wage to avoid taxes?

      They should be peddling that shit to the CEOs who want more, more more regardless of the taxes (that they'll avoid anyway).

      There already is class warfare in America. Unfortunately, the rich are winning.

      by Puddytat on Tue Sep 06, 2011 at 02:05:11 PM PDT

      [ Parent ]

    •  Fucking idiots & no fines for malpractice. (3+ / 0-)
      Recommended by:
      Unit Zero, esquimaux, millwood

      I knew there was a reason I've ranked USA Today with the Nat'l. Enquirer. Son of a bitch, people are so stupid!

      Watch DemocracyNOW! for a change. Read digby or Greenwald...but please toss the crap back into the heap.

    •  ignorance is bliss (3+ / 0-)
      Recommended by:
      Calamity Jean, Unit Zero, VA Breeze

      especially with National newspaper journalists...

      My other favorite these days...The Government doesn't create jobs....just straight nonsense being stated over an over again...and without the media or Democrats counterbalancing this nonsense, it start to sink in...

      The big lie...

      "But once John Boehner is sworn in as Speaker, then he’s going to have responsibilities to govern. You can’t just stand on the sidelines and be a bomb thrower." - President Obama, 12-07-2010

      by justmy2 on Tue Sep 06, 2011 at 04:27:27 PM PDT

      [ Parent ]

    •  There's more than a little bad advice... (2+ / 0-)
      Recommended by:
      Calamity Jean, Unit Zero

      ...to be found in that column.

      Aside from the stupid tax bracket advice, I was also really impressed with their budgeting advice that I should be spending 18% of my budget on groceries.  So, as a single person, I should be spending as much money on groceries as an equally paid coworker with a stay-at-home spouse and four kids?  

      So out of the four bits of advice reproduced in the article, one (about raises) was completely wrong and had to be corrected, and a second one (about budgeting) is so generalized as to be completely worthless.  Um, yeah...I don't think I'll be buying that particular advice book any time soon.

      Political Compass: -6.75, -3.08

      by TexasTom on Tue Sep 06, 2011 at 06:25:34 PM PDT

      [ Parent ]

    •  These People Are Not Stupid (3+ / 0-)
      Recommended by:
      Marie, Calamity Jean, Unit Zero

      They publish these things FOR A REASON, and they know exactly what they're doing.  It's not stupidity, it's deception, and it's intentional.  We MUST recognize that they are smart, determined, resourceful, and evil.  And we must act accordingly.

  •  Poll: Which facepalm pic is best? (25+ / 0-)

    1.

    demotivational-poster-lion-facepaw

    2.

    godzillafacepalm

    3.

    Imp_facepalm2

    "Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity." --M. L. King "You can't fix stupid" --Ron White

    by zenbassoon on Tue Sep 06, 2011 at 12:00:52 PM PDT

  •  Jed, in another life were you (8+ / 0-)

        Bud Abbott, the straight man who set up Lou Costello?

        Your diaries are the best.

  •  Higher tax bracket? (12+ / 0-)

    I shoulda lived so long!

    Float like a manhole cover, sting like a sash weight! Clean Coal Is A Clinker!

    by JeffW on Tue Sep 06, 2011 at 12:05:06 PM PDT

    •  Oy, I've got a grrrreat reply to you, but (1+ / 0-)
      Recommended by:
      JeffW

      won't say it ;)

      Maybe change your tense?

      Don't tell me what you believe. Tell me what you do and I'll tell you what you believe. Meteor Blades 48forEastAfrica - Donate to Oxfam

      by gooderservice on Tue Sep 06, 2011 at 02:03:57 PM PDT

      [ Parent ]

      •  I'm retired... (1+ / 0-)
        Recommended by:
        gooderservice

        ...and if I had taken the bait in 2004, I would have been making low 6-figures, as the section head. I was ambivalent about it by then, and didn't like or trust the deputy commissioner who was asking me to "step up", without offering me any incentive.

        Tense remains the same, unless I come up with some nifty tweaks to lithium-ion battery design, or maybe start making stainless steel Erector part replicas, and start a company.

        Float like a manhole cover, sting like a sash weight! Clean Coal Is A Clinker!

        by JeffW on Tue Sep 06, 2011 at 04:41:22 PM PDT

        [ Parent ]

  •  The False Consciousness of "Tax Bracket creep(s)" (14+ / 0-)
    a failure to recognize the instruments of one's oppression or exploitation as one's own creation, as when members of an oppressed class unwittingly adopt views of the oppressor class

    I am off my metas! Präsidentenelf-maßschach; Warning-Some Snark Above"Nous sommes un groupuscule" (-9.50; -7.03)

    by annieli on Tue Sep 06, 2011 at 12:05:17 PM PDT

    •  Who was it who was going to (0+ / 0-)

      stop earning money once she made $49,999 thousand so she wouldn't be pushed into the next tax bracket?  I keep thinking Orly Taitz, but that may be wrong.

      The thing is, it's not just the individual who spreads the   information who is mistaken, it's that other people led astray, also end up mistaken.

      Democrats - We represent America!

      by phonegery on Tue Sep 06, 2011 at 04:31:29 PM PDT

      [ Parent ]

  •  Brian Sandoval is my boss... (5+ / 0-)

    You know, the R governor of Nevada who's quit every job he's ever had to take a better one. Everyonehere expectshim to quit the governorship if the veep slot is offered to him.

    I didn't have to ask for the 12-13% paycut he gave me this year on top of the ~8% cut last year. We state employees were basically told deal with it or find another job. The realities of working for the state in a right to work state!

  •  A fine example of mainstream journalism (14+ / 0-)

    Or, what passes for it today.

    Rick Perry is a monstrous lie.

    by Paleo on Tue Sep 06, 2011 at 12:21:52 PM PDT

  •  Winning the lotto will put you in a higher bracket (18+ / 0-)

    but I suppose one may as well give back that winning ticket. Wouldn't want to pay those high taxes!

    •  Actually, there's a lot (1+ / 0-)
      Recommended by:
      phonegery

      of stories of winners going bust in rather horrible fashion after winning the lottery.  More than a few ended up with less than they started with...

      So, in that one case, her weird logic might apply, but really having less to do with taxes than having to do with the problems people have managing money when they've never had to on a larger scale.  But there is a very bad tax angle which is that if you do not take the lump sum, the tax people still want you to pay on the entire amount you won immediately.  There were a whole string of stories of people selling their prize annuities for pennies on the dollar to meet that obligation.

      Back to our regular programming now...

      •  You sure this: (0+ / 0-)
        But there is a very bad tax angle which is that if you do not take the lump sum, the tax people still want you to pay on the entire amount you won immediately.  There were a whole string of stories of people selling their prize annuities for pennies on the dollar to meet that obligation.

        isn't another urban legend?  

        •  Yes - it is the same for inheritances (0+ / 0-)

          in tax brackets well over what most people have to worry about, too.

          Prizes are actually pretty aggressively taxed. Don't you remember when Oprah gave away all those cars to her audience and then they found out that they had to pay a large sum of cash if they wanted to keep the cars to the tax folks?

          http://money.cnn.com/...

          IIRC - The state lottery commissions responded to some really bad situations where people won hundreds of millions of dollars and unknowingly took the annuity rather than the flat payout by making it easier to choose which option after they won.

          •  Prizes aren't taxed any higher (0+ / 0-)

            than earned income.  The Oprah car give-away wasn't unique.  

            You do seem to mis-informed on lottery winnings:

            According to the Minnesota State Lottery, “For every Lottery prize over $5,000, 32.25 percent is deducted for federal and state withholding. Federal law requires the Lottery to withhold 25 percent of each payment for federal income tax and state law requires that 7.25 percent be withheld for Minnesota personal income tax.”
  •  I was simulteanously hired and fired today (4+ / 0-)

    I have never had that experience before. It was quite exasperating. Right to work states are asinine.

    Oh well. Anyone who would do that is going to be a pain in the ass to work for anyway.

    Just say' NO' to conspiracy theories

    by Krush on Tue Sep 06, 2011 at 12:54:56 PM PDT

  •  The problem is (22+ / 0-)

    a lot of people really think it works this way.  I used to work with a lot of PhD's or soon to be and a majority of them didn't understand that. They were trying to argue for a flat tax based on the raise issue.  These are not dumb people and its reasons like this that even they are confused.

    That being said there are deductions that phase out between 100K-110K which could force you to lose a deduction you once had and actually cost more.

    Happened to me last year.

    •  It's sad isn't it? (13+ / 0-)

      Every time raising taxes on the highest wage-earners is up for discussion, the MSM trots out someone who should know better  - a doctor, lawyer, etc. in private practice who is right at $250K, with a tired quote about how they will have to turn down clients or risk losing money.  All that is required is a simple table that shows how the tax system works, but the reporters consistently fail to do their job and debunk the myth.

      •  A simple use of the Google: (4+ / 0-)
        Recommended by:
        Puddytat, aztecraingod, Hark, JesterDel

        I searched "US Income Taxes Brackets" and got this.  It pretty much tells the story...

      •  I did hear of one true case (0+ / 0-)

        it's not quite the same, but is similar.

        A former co-worker and I were both let go and received a pretty substantial settlement.

        Unfortunately, we received it December, meaning that it added to our already high salary. and was taxed at a high amount.

        I believe it did put us up into a new tax bracket.

        Now, had they delayed the payment for a few weeks, it would have come in the new fiscal year, when we were unemployed, so that extra severance amount would have been taxed at a much lower rate.

        Again, not quite the same, but I think this is the kind of case where the urban myth gains ground.

        •  A few things: (4+ / 0-)
          Recommended by:
          Val, Hark, ebohlman, Marie

          (1)  My condolences on you losing your job (hope you got a new one and soon);

          (2)  Yes, you certainly would have been better off financially to get the settlement the following year if you had no income for at least a portion of the year.  You can bet the employer had a reason to pay when they did, and if they would have benefitted by delaying payment they would have sought to do so;

          HOWEVER:

          (3)  The bonus/lump sum/settlement taxed at a higher rate can be a pain in the arse, but should be leveled off when you file your taxes for the entire year.  In other words. the increase could temporarily put you in a higher bracket than normal for the pay period, but if it a quartlery occurance or a once-in-a-lifetime event, your tax liability for the entire year should smooth it out to the extent it should be based on the current rates.  In other words, everyone who encounters this should be due for a refund (or at least a drastic reduction in their overall tax liability).

          •  mostly right (1+ / 0-)
            Recommended by:
            RethinkEverything

            but even if no income bracket changed, paying me in December meant that I was taxed at 33% for that extra 75 thousand dollars, but if I had been paid in January, I would have paid only 25% (or whatever) of 75k.

            Again, this is not really the same as the myth propagated in the article, but it's close enough that once it gets passed between two people, it gets distilled to 'you get punished for making more money'.

            the next full year I made no money except unemployment, and that ran out in October.  I don't know, maybe the math does work out.  If I had gotten the 75k in the new year, I would have had a larger tax liability that year, but as I recall, I ran the numbers both ways and think I lost about 5k in the deal.

            Anyway, the other commenters are right.  THe company did kinda screw me, but it was BP, what do you expect.

            Plus, I'm luckier than a lot of other folks out there.  At least I got a severance.  Most weren't aren't so lucky.

            •  Consider FICA and 409A (2+ / 0-)
              Recommended by:
              Marie, RethinkEverything

              If you are over the FICA limit (currently about 106,000) near the end of the year, you can save the social security portion of the tax.  That might offset, or partially offset, the higher marginal rate.

              Spreading a payment over two years is known as bracket-splitting.  However, doing so can implicate section 409A, which imposes a penalty tax of 20% on certain deferred compensation arrangements.  It is a very technical section of the tax law, with lots of ways to mess up.  So any such arrangement should be scrutinized by a tax lawyer or accountant to ensure that the requirements of 409A are complied with.

              "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

              by Old Left Good Left on Tue Sep 06, 2011 at 05:18:12 PM PDT

              [ Parent ]

          •  You're mixing up two issues (3+ / 0-)

            You're correct that the increase in withholding percentage that occurs after a one-time bonus or severance payment will average out and result in reduced tax liability or a bigger refund. But the other issue still remains: the portion of his severance payment that put him into the next tax bracket will still be taxed at a higher rate than it would have been if he had received it the next year. So he'd still be better off if they'd waited to pay him.

            While it never makes sense to forego income based on tax-bracket considerations, it sometimes does make sense to defer additional income if you expect your total income to be lower in the future. Of course you have to take the time value of money into account when making such a decision.

            "We recommend, as a precautionary measure, that people with respiratory infections should be advised not to blow their vuvuzela in enclosed spaces and where there is a risk of infecting others."

            by ebohlman on Tue Sep 06, 2011 at 04:53:59 PM PDT

            [ Parent ]

        •  your compANY SCREWED YOU (0+ / 0-)

          TO SAVE THEMSELVES A BUCK OR TWO....
          YES THEY COULD OF WAITED. BUT IT WOULD HAVE DONE THEM NO GOOD

          MJTaylor22--concerned citizen who believes in giving back.

          by mjtaylor22 on Tue Sep 06, 2011 at 02:29:54 PM PDT

          [ Parent ]

    •  Yes, there are complicated things (4+ / 0-)

      that may make you want to talk to an accountant (I got unexpectedly hit by the Roth IRA phaseout due to capital gains, for example) but that is a very different issue then tax brackets.

      Some people really need to look at the actual paper instructions for the 1040 long form, and see the actual pay per income charts.

      "All things are not equally true. It is time to face reality." -Al Gore

      by Geek of all trades on Tue Sep 06, 2011 at 01:27:49 PM PDT

      [ Parent ]

    •  What are these deductions that phase (0+ / 0-)

      out >$100K that leads to lower net income at $110K than $100K?

      •  Most of the larger ones, unfortunately... (3+ / 0-)

        The exact schedules vary -- but most of the standard 1040 long form itemizations (mortgage, charitable giving, certain instruments around pension/retirement savings) do start to unravel around $100k.

        The immediate territory after crossing into 100k land is pock-marked with landmines that actually can swing raises into the negative territory right around that threshold --- highly dependent on individual filings, circumstances and deductions, of course.

        As a general rule -- if you're under $100k, chances are supremely high that a raise is always a good thing so far as net income goes.  It's right at that dividing line between 5 and 6 figures that it might actually make sense to do the long math.

        USAToday's problem was really that they used a terribly crappy example.... if you're making less than the the national median, the raise is always a good thing.  It's almost always a good thing up to about $100,000.... which covers, well -- most of us.

        If you get to the point where a raise bumps you over $100,000 -- then it's an exercise worth going through....  

        At that point - the key question becomes one of itemization --- if you don't itemize, you can probably be safe in taking the raise.   If you do, however -- then you should definitely do the long math homework.

        Full Disclosure: I am an unpaid shill for every paranoid delusion that lurks under your bed - but more than willing to cash any checks sent my way

        by zonk on Tue Sep 06, 2011 at 02:28:29 PM PDT

        [ Parent ]

        •  Still not getting it. (0+ / 0-)

          Are you saying someone with $100,000 AGI less $20,000 allowable deductions leaving taxable income of $80,000 gets a raise to $101,000 and allowable deductions are reduced by $1,000 or more?

          •  Yes - (0+ / 0-)

            IRC Sec 68 is the big hammer -- if your AGI exceeds the "allowable amount" ($100K for joint filers, actually $50k for individuals... I thought this was higher so the example from USAToday is still too low to matter, but not quite as a bad as I thought), then deductions are reduced by the lesser of either:

            1) 3% of AGI over the applicable amount, or,

            2) 80% of the amount of allowable itemized deductions.

            There are also exemptions to this section -- medical expenses and I believe, certain theft, casualty, etc circumstances.

            Again, it's highly dependent on how and what you itemize - but if you have big ticket deductions, going over the "allowable amount" can have big ramifications.

            Full Disclosure: I am an unpaid shill for every paranoid delusion that lurks under your bed - but more than willing to cash any checks sent my way

            by zonk on Tue Sep 06, 2011 at 05:13:01 PM PDT

            [ Parent ]

            •  Would like to see a real example -- (0+ / 0-)

              -- the AGI limitation number I saw was approximately $168,000.  From my quick look at this, it seemed to be tackling tax subsidies for discretionary expense deductions that we're probably being abused.

              •  Abuse is the reason for the IRC Sec 68 (0+ / 0-)

                limits --

                in the example below around charitable giving, if you can afford to donate 50% of your AGI to charity at $49K -- then the chances are pretty darn good (but not absolute!  I know -- not directly, but just via reading about them -- some peace activists who truly do try to ensure that their income and taxes get to be such that they can honestly say they don't pay for defense spending... or anything else at the federal level, of course - but the conscientious objection to war leads them to ensure their tax bill comes out zero) that you're independently wealthy and your "paycheck" has little relation to your actual net worth.

                Again, though -- the "cracks" in the system generally occur right at those thresholds.

                If your income/AGI goes from $49,900 to $50,400 -- which is basically a 1% raise -- the equation for your deductions might very well change quite radically.

                In the year you were under 50K -- your deductions are limited only by the statutory limits of those deductions.... Once you cross over, your deductions are now limited by a formula that can be quite unforgiving.

                Full Disclosure: I am an unpaid shill for every paranoid delusion that lurks under your bed - but more than willing to cash any checks sent my way

                by zonk on Tue Sep 06, 2011 at 05:44:26 PM PDT

                [ Parent ]

        •  Your assertion could use an example (2+ / 0-)
          Recommended by:
          phonegery, Marie

          I crossed the 6 figure threshold and my income kept going up. I can't think of a single scenario where increasing gross income decreases net income, so I'd appreciate an example.

          •  It happens if you're collection Social Security. (0+ / 0-)

            Up to 85% of your Social Security benefit is taxable depending on your adjusted gross income amount on the 1040.  I think the tax starts kicking in at about 24K for someone filing single.

            Democrats - We represent America!

            by phonegery on Tue Sep 06, 2011 at 04:48:19 PM PDT

            [ Parent ]

          •  Below is a good one (1+ / 0-)
            Recommended by:
            Hark

            But just for an easy -- if fairly implausible -- example, if you maxed your charitable contributions (50% is the limit, I think) -- you can fully itemize all of these deductions up to the limit.... until you cross the allowable income threshold ($100k for joint filers, $50k for individuals).  At that point, your deductions are limited per above/below.  

            At that allowable income threshold -- the IRC Sec 68 caps kick in which then limit those deductions to 3% of AGI over the allowable amount or 80% of max allowable deductions (whichever is the lesser amount).

            So - again, knowing this is a nonsense example - let's say your AGI is $49K... and being the charitable sort, you give a ton of your income to charity.

            Until you hit the "allowable amount" -- you can deduct up to 50% of your AGI (technically, 'contribution base' and AGI aren't necessarily the same thing, but let's pretend they are).

            Sooo... in 2010, you can itemize up to $24,500 in charitable contributions.

            In 2011, you get a 10% raise (again, we're playing fantasy here)... and suddenly, your AGI (filing single) has crossed the allowable amount.  It's now $54,000. Now - if you continue to be charitable - you can no longer straight away itemize that 50%.... Even though you now give ~$27k to charity, you're now limited to itemizing the lesser of 3% of AGI over the max (or 3% of that 4,000 that crossed you over the allowable amount threshold) OR 80% of the max itemized deduction limit (not gonna bother to look that one up).

            Of course -- if you're making just under or just over $50k -- chances are that you cannot afford to donate half to charity unless you're independently wealthy (hence the reason for the rules)....

            But the key is that once you cross certain thresholds, your deductions are suddenly subject to limitations that don't necessarily scale very well.  

            None of this will come out in your paycheck, of course -- I can't think of any scenario where your week-to-week paycheck actually falls -- but at the end of the year when you file your taxes, it's entirely possible your actual income could drop based on what happens with your deductions.

            Like I said - if you don't itemize, then none of this matters... but if you do -- it IS well worth doing the math when cross those IRC Sec 68 allowable amount threshold.

            Full Disclosure: I am an unpaid shill for every paranoid delusion that lurks under your bed - but more than willing to cash any checks sent my way

            by zonk on Tue Sep 06, 2011 at 05:34:06 PM PDT

            [ Parent ]

            •  Okay -- let's find that person (0+ / 0-)

              with $49,000 AGI and donates $24,500 that would be screwed with a 10% income increase.  That's the problem with implausible examples.  And lets not forget that those charitable contributions are being subsidized by taxpayers -- at a 15% rate, Pat Robertson gets $24,500 and the government $0 instead only $20,825 and the government getting $3,675.  However, that's really the sort of thing the legislation is going after.

            •  Thanks (0+ / 0-)

              Interesting subtleties. I wonder if there is a realistic scenario under which this could happen.

      •  Let me give you another example (1+ / 0-)
        Recommended by:
        phonegery

        I've seen this a lot -- bumping into that six figure range will pretty much kill chances of getting financial assistance for college -- either direct financial assistance or low-interest student loans.  So, you have a few more thousand dollars in after-tax dollars, and you have to pay $30,000 in college expenses for your child.

        •  Not tax policy, but you're making (0+ / 0-)

          a similar claim that more income is disproportionately penalized.  What I'd like to see are real world examples and not what people believe is true.

          •  I had a relative who just went through (0+ / 0-)

            trying to get college financial aid.  And several friends who are as well.  It's not a hypothetical.  

            There's a formula that supposedly figures out, after necessities like food, shelter, clothing, etc., how much a family is "supposed" to be able to contribute to a child's college education, (it's called the EFC) and that's the basis of financial aid.   Cross over the six figure line for household income (remember, that can be two people working), and they pretty much expect the family to pay for it all.  

            •  Okay -- quick and dirty comparison. (0+ / 0-)

              And let's remember the point of financial aid -- to assist the neediest of students.

              There are two criteria: available assets and net income (excludes payroll taxes) for both parents and the student.  To keep it simple, the student has no assets or income, and the family size is three.

              finaid quick calc

              1) Parent(s) $50,000 assets and $50,000 income.  EFC=$4,047.  Probably qualifies for a Pell Grant (maximum $5,550).

              2) Parent(s) $75,000 assets and $75,000 income - EFC- $12,712 (probably doesn't qualify for grant)

              3) Parent(s) $100,000 assets and $100,000 income - EFC $21,972.  (probably doesn't qualify -- 10% of SUBSIDIZED Stafford loans are awarded to those in the $100,000 plus income category)

              With 50% more in assets and income, the additional EFC for #2 is $8,685.

              100% more - additional EFC is $17,925.  

              Doesn't look as if the higher wealth and income families are getting a raw deal in comparison with low wealth/income families.  I personally would submit that that $4,047 EFC is more dear to family #1 than $21,972 is to family #3.  

      •  The one that cost me (0+ / 0-)

        was capital gains added to our MAGI then the mortgage insurance became deductible up to the percentage of how close you were to 100K.  I don't like the PMI deduction anyway I would rather them get rid of it because it subsidizes people buying houses they cant afford.  But it exists so i used it.

         

    •  that's cuz they don't get (2+ / 0-)
      Recommended by:
      Marie, Calamity Jean

      the concept of MARGINAL tax rates.  They think their entire pay will be taxed at the higher rate.  I don't understand what's so difficult about understanding that the NEXT dollar earned will be taxed at the higher rate, NOT all the dollars you earn.

      "... a disciplined minority of totalitarians can use the instruments of democratic government to undermine democracy itself." -- Hannah Aredt, regarding the behavior of the National Socialist (NAZI) Party in the Reichstag in the Weimar Republic.

      by billlaurelMD on Tue Sep 06, 2011 at 02:25:34 PM PDT

      [ Parent ]

      •  Sure - but that's the argument for tax reform... (2+ / 0-)
        Recommended by:
        Cassandra Waites, ebohlman

        Especially for tax reform done in a marginal rate neutral form ---

        I steadfastly believe that the reason that's so poorly understood is because the whole idea of marginal rates only affecting "dollar one+" really only works for a filer who doesn't itemize at all.

        If you itemize -- and anyone with a mortgage or joint filing/with dependents almost always should be -- it does get a bit tricky at certain thresholds... hence, I suspect that a lot of people shorthand it into thinking that it's all about their bracket - and technically, it is, just not for the reasons that they think it is.

        I continue to think this is a major progressive blindspot when it comes to tax discussions -- the marginal rates don't tell the whole story; in many circumstances, they don't even tell most of it.  

        As we have always done every 25 years or so -- and this has been true since the income tax was put in place a century ago -- the hedges need to be trimmed regularly...  deductions, usually well-intentioned, but certainly sometimes 'goodies' to key constituencies, become overgrowth that obscures the actual meaning of the marginal rates.

        Every generation and change, it's a good idea to do a radical, "no sacred cows" pruning of them to make the marginal rates meaningful and easy shorthand again... then the process begins anew, and we repeat the exercise.

        It's healthy tax code evolution that allows to continue to service a changing society and changing nation -- some deductions become havens without meaning, others become obsolete, others don't exist but need to... during the interlude period between major reforms - these things all happen piecemeal, usually as a part of specific policy initiatives or needs.

        What good tax reform does is set all those individual policy needs aside in favor of a tax-centric review that solely examines the nation's revenue needs and a bare minimum baseline of deductions to calibrate those needs against good of the nation/individual citizens.

        Once pruned to that bare minimum, the new, fresher IRC is now ready to once again begin sprouting those changes/new deductions to support policy.... and we'll need to repeat the process in another 25 to 30 years.

        Full Disclosure: I am an unpaid shill for every paranoid delusion that lurks under your bed - but more than willing to cash any checks sent my way

        by zonk on Tue Sep 06, 2011 at 02:51:59 PM PDT

        [ Parent ]

        •  I should point out, though (0+ / 0-)

          that those considerations regarding deductions phasing out don't apply to the specific issue of repealing the Bush high-income tax cuts, since anybody affected by that repeal would already be well past the point where deductions have phased out.

          "We recommend, as a precautionary measure, that people with respiratory infections should be advised not to blow their vuvuzela in enclosed spaces and where there is a risk of infecting others."

          by ebohlman on Tue Sep 06, 2011 at 05:00:33 PM PDT

          [ Parent ]

    •  My husband believes it! (2+ / 0-)
      Recommended by:
      Cassandra Waites, Marie

      He refuses to work on Sunday, because he is union and makes double time on Sunday.  He insists that if he makes double on a Sunday, it's eaten up in taxes anyway.... so he won't do it.  

      My point....Granted, there is more taken at a higher rate for that Sunday work, but it is not like you get nothing.

       He doesn't see it that way.  (shrug)

  •  This is an urban legend that has (12+ / 0-)

    been around for decades.  So many people report that this happened to them that others believe it's true.  When it's actually impossible.

  •  I hear similar statements at work (14+ / 0-)

    I don't  know how many times I hear people declining overtime pay at work with the claim that the overtime will put them into a higher tax bracket and therefore, their check will be smaller if they take the o/t pay(thank you unions for that BTW).

    •  Whenever I hear someone complain about taxes (6+ / 0-)

      I offer my congrats on their increased wages!

    •  What they're really thinking of (2+ / 0-)
      Recommended by:
      Marie, Calamity Jean

      is the fact that their pay will be withheld at a higher rate for pay periods in which they're working overtime. But they'll get all or most of that back when they file; it will result either in a larger refund or a smaller tax payment. This actually has nothing to do with brackets.

      As another poster pointed out, most people don't seem to realize that getting a big tax refund means that the amount of money withheld from your pay for tax purposes was a lot bigger than the actual amount of tax you needed to pay.

      "We recommend, as a precautionary measure, that people with respiratory infections should be advised not to blow their vuvuzela in enclosed spaces and where there is a risk of infecting others."

      by ebohlman on Tue Sep 06, 2011 at 05:07:05 PM PDT

      [ Parent ]

    •  I see a similar problem with people (0+ / 0-)

      that think that a $1 deduction saves them a $1 in taxes.  Might explain why so many people didn't think twice about taking on those high-interest mortgages.

  •  USA Today still exists?!?!? nt (3+ / 0-)
    Recommended by:
    Puddytat, happenstance, phonegery
  •  Is it any wonder why conservatives can't (5+ / 0-)

    balance the budget and are completely nonsensical on taxes?

    They obviously don't have any fucking clue how our system works.  But I guess one could substitute "anything" for "our system" and be just as right.

    Democracy is often an indictment of the voting populace.

    by electricgrendel on Tue Sep 06, 2011 at 02:04:54 PM PDT

    •  Michele Bachmann was a tax lawyer (0+ / 0-)

      and she has gone out saying "businesses with $250,000 gross income will face massive tax increases" if the $250,000 tax bracket is raised by 3 points.

      That short sentence is wrong in four ways.

      It boggles the mind. That's not a slip-of-the-tongue, that's a genuine failure of understanding with no possible explanation. I can only imagine that her entire career has involved having her staff do everything for her, but surely even the laziest human being can't spend decades in taxation and law without obtaining even the slightest shred of information. How is it possible?

      "Only idiots believe the earth is getting warmer. Besides, they've proven it's only getting warmer because of sunspots."

      by Carnet on Tue Sep 06, 2011 at 10:54:27 PM PDT

      [ Parent ]

  •  i need to make a face slapping game (2+ / 0-)
    Recommended by:
    RethinkEverything, cloud9ine

    one in which a player can insert a photo of an idiot and the stupid fucking thing they said and then push the button and a hand slaps them across the face.

    You dick, why do you have to focus on the negative. - Thomas Haden Church as Jack in the film Sideways

    by Anton Bursch on Tue Sep 06, 2011 at 02:07:15 PM PDT

  •  Almost got roped in by this logic until I did math (13+ / 0-)

    myself.  The progressive tax code means that if you are in the 25% tax bracket you only pay 25% of your taxes on the income above the amount that places you in that bracket, which means your effective tax bracket is significantly less.  I felt so stupid when I almost fell into that trap, but was glad I had the sense to double check the tax rules myself, before complaining about the effect of the raise.  This kind of mental manipulation is reprehensible, and USA Today should be ashamed of themselves, not double down on their stupidity.

    The only thing we have to fear is fear itself - FDR. Obama Nation. -6.13 -6.15

    by ecostar on Tue Sep 06, 2011 at 02:08:36 PM PDT

    •  As a rule of thumb (1+ / 0-)
      Recommended by:
      Marie

      Your effective tax rate doesn't approach your top marginal rate until your income approaches ten times the amount of your bracket cutoff. And if it does, that really means the bracket structure isn't all that progressive; in a truly progressive system, if Jack makes ten times as much as Jill he should be paying a substantially higher marginal rate (unless it's because Jill's making hardly anything).

      "We recommend, as a precautionary measure, that people with respiratory infections should be advised not to blow their vuvuzela in enclosed spaces and where there is a risk of infecting others."

      by ebohlman on Tue Sep 06, 2011 at 05:13:02 PM PDT

      [ Parent ]

  •  Until quite recently I too believed this canard (9+ / 0-)

    that it was possible to take a net hit from being "bumped into a higher tax bracket".     When I read a laboriously clear explanation, boy oh boy was I embarassed to have swallowed the misinformation for so many years.

    "The extinction of the human race will come from its inability to EMOTIONALLY comprehend the exponential function." -- Edward Teller

    by lgmcp on Tue Sep 06, 2011 at 02:08:57 PM PDT

  •  Sounds like... (2+ / 0-)
    Recommended by:
    phonegery, Marie

    She is the next candidate for the Obama economic team.

    The 'Free Market' will decide. It will decide that the United States cannot consume 25% of the world's resources and the upper 1% cannot control 50% of the wealth.

    by RichM on Tue Sep 06, 2011 at 02:09:05 PM PDT

  •  You'd be surprised how many (8+ / 0-)

    people still believe that old BS about tax brackets, lol. People who from personal experience should know it isn't true.

    Moderation in most things.

    by billmosby on Tue Sep 06, 2011 at 02:14:34 PM PDT

  •  She must be auditioning as a negotiator for (2+ / 0-)
    Recommended by:
    esquimaux, phonegery

    the Obama administration.

    So if you follow her advice, you might end up with higher taxes even though you didn't get a raise. But at least you'd have a VIP parking spot. And you'd have the pride of being the mathematical adult in the room.

    ePluribus Media
    Collaboration is contagious!

    by m16eib on Tue Sep 06, 2011 at 02:14:35 PM PDT

  •  I want to give more in taxes because (5+ / 0-)

    it means I'm earning more.   To quote Dick Cheney: "Bring it on".

    USA Today needs to admit defeat on this

  •  Laura Laing seems like a pleasant enough person (4+ / 0-)

    http://www.lauralaing.com/

    She's even on the National Association of Gay and Lesbian Journalist's RE:ACT team, which critiques and reacts to (mis)representations of GLBT people in the media.  She just doesn't know anything about economics or the tax code.  And from the book cover it seems like the book isn't really about those things--it's basically a quasi-remedial math book, and I'm guessing she just pulled a tax example in to illustrate a point about math.  The joke is on USA Today which thought a remedial math book (I understand why they'd need one, by the way) would be a good source to back-up a much-questioned claim about tax rates.

    Let us resolutely study and implement the resolutions of the 46th Convention of the Democratic Party!

    by Rich in PA on Tue Sep 06, 2011 at 02:15:36 PM PDT

    •  USA Today would do its readers a service (3+ / 0-)
      Recommended by:
      Rich in PA, LynChi, Calamity Jean

      ... if, instead of parroting something in a book, it would assign one of its better reporters to write an article debunking common tax myths and spelling out the basics of taxation; i.e., the concept of marginal rates; gross income vs. taxable income (another widely misunderstood concept); the standard deduction or itemization plus personal exemptions and how they reduce your tax liability; how sole proprietorships, LLPs and the like lower their taxable income through deductible business expenses; how FICA tax is paid; all the other federal taxes people pay besides income tax; why sales taxes and flat taxes hurt the poor more than the well-to-do; a breakdown of the folks who don't pay federal income tax; how lower capital gains taxes keep the wealthy's effective tax rates lower than those of their secretaries and gardeners, etc., etc. The American electorate is in dire need of a basic understanding of how taxation works in this country. The more newspapers, magazines and television news programs tackle this issue, the more intelligently we can conduct this debate. But I'm not holding my breath.

  •  Me thinks... (7+ / 0-)

    nobody at USA Today is getting a raise, at least not any time soon.

    Words can sometimes, in moments of grace, attain the quality of deeds. --Elie Wiesel

    by a gilas girl on Tue Sep 06, 2011 at 02:16:47 PM PDT

  •  Groceries should be 18% of your income? (8+ / 0-)

    I heard this one recently and it is quoted in the article.  Doe this mean Warren Buffet should spend tens of millions on groceries?

    It seems difficult to generalize the percentage -- obviously people who don't make much money are going to have to spend a larger percentage to eat.  

    •  Billions, even! (6+ / 0-)

      PAR-TAY in Omaha!  Free lobster and caviar for everyone!

    •  wow ... let's see (4+ / 0-)

      My partner and I spend about $500/mo or so on groceries.  We make $150K a year between us.  That's 4%.  If were were making $35K between us, then it would be about 18%.  And herein is the point.  If you're doing well, those fixed costs like groceries, rent, utilities and the like are relatively small potatoes.  But if you're not well off (say 200% of poverty, which I think is considered for a "family" of 2, maybe not far from that $35K figure), it's a big bite in the butt!

      "... a disciplined minority of totalitarians can use the instruments of democratic government to undermine democracy itself." -- Hannah Aredt, regarding the behavior of the National Socialist (NAZI) Party in the Reichstag in the Weimar Republic.

      by billlaurelMD on Tue Sep 06, 2011 at 02:32:36 PM PDT

      [ Parent ]

    •  That makes sense if you qualify it to (0+ / 0-)

      non-discretionary income, i.e. the fixed costs that billlaurelMD referred to.

      "We recommend, as a precautionary measure, that people with respiratory infections should be advised not to blow their vuvuzela in enclosed spaces and where there is a risk of infecting others."

      by ebohlman on Tue Sep 06, 2011 at 05:16:28 PM PDT

      [ Parent ]

  •  And which vanity press (0+ / 0-)

    published that insane book???

    Public Intellectuals, where have you gone?

    Words can sometimes, in moments of grace, attain the quality of deeds. --Elie Wiesel

    by a gilas girl on Tue Sep 06, 2011 at 02:20:35 PM PDT

  •  I did have to ask for a pay reduction once. (1+ / 0-)
    Recommended by:
    phonegery

    My raise had put my a few bucks over a line that the employer used as a measure of "highly paid" employees. (HAHAHAAA!!! I think it was $20k, and not THAT long ago.)  And above that line, employees had to put in MORE than the few bucks more on their benefits menu.

    I asked my boss to LOWER my pay to a couple dollars under the line, so I wouldn't be a highly paid employee. The affect was that my net pay was higher.

    "The Greek word for idiot, literally translated, means one who does not participate in politics. That sums up my conviction on the subject." Sen. Gladys Pyle (1890-1989)

    by Melanie in IA on Tue Sep 06, 2011 at 02:20:40 PM PDT

  •  Actually (6+ / 0-)

    Although the USA Today story is idiocy, there are actually times you may not want a raise, particularly if your work is that flexible.

    For example- got kids in college?  If they get financial aid that is tied to need, you may want to get those extra weeks of vacation, particularly if you can carry them over year to year and get paid for the time when you leave the job- after your kids are out of school.

    There's probably other, similar circumstances out there, this is just the one I know of someone having to do.

    The best pizza comes from New York.

    by JakeC on Tue Sep 06, 2011 at 02:21:02 PM PDT

    •  Has nothing to do with you giving more (2+ / 0-)
      Recommended by:
      Marie, Calamity Jean

      "money to Uncle Sam in taxes"

      "But once John Boehner is sworn in as Speaker, then he’s going to have responsibilities to govern. You can’t just stand on the sidelines and be a bomb thrower." - President Obama, 12-07-2010

      by justmy2 on Tue Sep 06, 2011 at 04:38:10 PM PDT

      [ Parent ]

  •  won't believe how common this meme is (7+ / 0-)

    "moving into next tax bracket leaves you with less".

    This is for boneheads that don't understand that tax-rates are marginal.

    Now, I can accept that many people don't get marginal, but does USA Today really have people writing for them that are so abysmally misinformed? Seems so. FSM help us all with this kind of ignorance so high up the food-chain

    •  USAToday is not that high up the (1+ / 0-)
      Recommended by:
      Marie

      food chain.  Short, simple articles can not convey all the nuance most stories require.

      They are a giant contributor to our "ADHD Nation".  Damn near twit-length articles.  Lowest common denominator language.  

      And delivered to most major hotel chains.

      Keep wondering what's wrong with the country.......

    •  The thing is, so few relatively low income (0+ / 0-)

      earners do their own taxes.  It's a lot easier to have them done. Even those who do their own taxes, probably use a tax preparation software.

      Once you figure out your taxable income, you can look at the tax table for that amount, and it will tell you how much to pay.  

      http://www.irs.gov/...

      I tried to copy and paste, but it didn't work.  Same old tax tables, tho.  It might be nice to figure out a way to get these copied, since even some commenting in this thread have been confused. Also, can be used to convince others.

      Democrats - We represent America!

      by phonegery on Tue Sep 06, 2011 at 05:30:18 PM PDT

      [ Parent ]

  •  Hmmmm..... (0+ / 0-)

    This is something to consider here...but, not for long.

    This is just so much about nuthin', actually, isn't it?

    Let's go after the big bucks...not the little pieces, okay?

    A little raise...or even a big raise...and we're talking about changing it to a parking space or some other bennie?  

    These are little things and mean squat in the grand scheme of things.

    Let's go after the big fish.  

    Next issue.

    - If you don't like gay marriage, blame straight people. They're the ones who keep having gay babies.

    by r2did2 on Tue Sep 06, 2011 at 02:22:52 PM PDT

  •  Well... there are (7+ / 0-)

    situations where low-income people can end up worse off if a pay increase eliminates their eligibility for subsidies for child care, food stamps or Medicare eligibility.  But that's very different than taxes.

    A little tender courage at that rare right instant, and things might well have turned out differently -- Ken Kesey

    by Frankenoid on Tue Sep 06, 2011 at 02:27:32 PM PDT

  •  stupid people shld be banned from newspapers (1+ / 0-)
    Recommended by:
    Calamity Jean

    But that is not going to happen...my raise could be bad because I might pay more taxes..Really.....
    That would assume that the increased percentage in taxes equals 100% of my dam raise........ what are the tax brackets again 10 25 33.....% something like that...so the diff in tax brackets is nowhere near  100% if I get a raise that raises me from  25% to 33 %.......I pay  8% more in taxes..And still keep 92% of my raise..........
    But wait..would I not also increase my  401k contribution thus  potentially keeping  more than  92% of my raise.....
    My goodness...........taxes are only bad if you are a tax cheat..........and a criminal..pay your way dammit pay your taxes and stop the USA  from going into debt with communist nations ..that truly practice socialism

    MJTaylor22--concerned citizen who believes in giving back.

    by mjtaylor22 on Tue Sep 06, 2011 at 02:28:02 PM PDT

    •  and you only pay (1+ / 0-)
      Recommended by:
      ebohlman

      in your example, 8% more in taxes on the dollars above the bottom of the 33% bracket.  Not ALL of your income.

      "... a disciplined minority of totalitarians can use the instruments of democratic government to undermine democracy itself." -- Hannah Aredt, regarding the behavior of the National Socialist (NAZI) Party in the Reichstag in the Weimar Republic.

      by billlaurelMD on Tue Sep 06, 2011 at 02:34:37 PM PDT

      [ Parent ]

  •  Sad (3+ / 0-)
    Recommended by:
    billlaurelMD, Cassandra Waites, Marie

    Sadly, many Americans actually believe this, perhaps even a majority. I can't count the number of times people claim to know somebody who turned down a raise since he would up making less (I'm too polite to tell them they have idiots for friends).

    Not only do many Americans believe it, we had a president (Reagan) who said it on national TV.

  •  I'm a CPA (8+ / 0-)

    and, You are Correct, Sir!

    It's amazing to me how tax and business illiterate most GOPers are.  They seem to think that a business that could make a tidy profit from hiring someone would not do so if they have to pay a small increase in taxes.  That's ridiculous.

    On the other hand, it's equally absurd to think that a business would hire someone for say, $30,000+ per year in order to get a $5,000 tax credit.  I hope that Obama's job plan on Thursday does not include this needless giveaway to the business community.  Instead, he should be concentrating on increasing demand by putting money into the hands of people who will spend it now.  

    ITLDUSO Honk "Hello" when I drive by!

    by caroman on Tue Sep 06, 2011 at 02:31:56 PM PDT

    •  and thank you, Mr. CPA (1+ / 0-)
      Recommended by:
      phonegery

      I used to be one ... changed careers.

      "... a disciplined minority of totalitarians can use the instruments of democratic government to undermine democracy itself." -- Hannah Aredt, regarding the behavior of the National Socialist (NAZI) Party in the Reichstag in the Weimar Republic.

      by billlaurelMD on Tue Sep 06, 2011 at 02:35:30 PM PDT

      [ Parent ]

    •  What I've wondered... (2+ / 0-)
      Recommended by:
      phonegery, Calamity Jean

      is do they then fire the employee when they're no longer getting the tax credit and then hire a new employee to take advantage of it? I would swear that is what one of my previous employers was doing.

      He would fire an employee who was doing a perfectly fine job, whose managers did not want the employee fired, and then tell that employee the position was being restructured. A short-time later, he'd hire someone to replace that person, but give them a different title and all the same responsibilities.

      And this happened all over the company, even with people who did not have so much seniority that they had to be making a lot of money.

      We Won't Let Republicans Replace Medicare with GOP Vouchercare!

      by CatM on Tue Sep 06, 2011 at 03:02:40 PM PDT

      [ Parent ]

      •  Could Very Well Be What's Happening (1+ / 0-)
        Recommended by:
        Calamity Jean

        Another problem with offering tax credits for new hires is the complex record-keeping to meet the requirements.  And, it can be gamed very easily, as maybe your company found out.

        Obama's jobs program has to be simple, big and start now.

        ITLDUSO Honk "Hello" when I drive by!

        by caroman on Tue Sep 06, 2011 at 06:56:44 PM PDT

        [ Parent ]

    •  Nailed it (0+ / 0-)
      On the other hand, it's equally absurd to think that a business would hire someone for say, $30,000+ per year in order to get a $5,000 tax credit.

      A lot of dingy ideas are getting aired out in this thread. Thank god.

      "Only idiots believe the earth is getting warmer. Besides, they've proven it's only getting warmer because of sunspots."

      by Carnet on Tue Sep 06, 2011 at 10:59:22 PM PDT

      [ Parent ]

  •  An insane Republican talking point (2+ / 0-)
    Recommended by:
    phonegery, Short Bus

    and unfortunately a Democratic one as well. We own our own business to business (really small at this point)and my so called Democratic sister in law said these exact words to me on Labor Day,. My business is down about 40%, our cash flow is terrible as our clients are only one step beyond us and we have run through our savings to compensate and live. She said well at least your taxes are down. small consolation when you face this trickle down poverty.  

    We are not personally in debt other then a modest mortgage and ongoing costs of operating let alone growing or hiring again. Were bootstrapping it and my freakin taxes as a sole proprietorship business hardly compensate for the damage done. How sick is this. Let them eat cake and enjoy there parking spaces. Meanwhile in reality how do I paymy taxes with the supposed tax breaks I get with a 40% reduction of account receivables and a bleak prospect of getting more clients in this bogus economy based on too big's profit with no remedying way for the workers where ever they toil to make a living  in a world that says all your money is mine and you pay our debts.        

  •  Stupid on many levels (2+ / 0-)
    Recommended by:
    esquimaux, phonegery

    While it is true that in rare circumstances, accepting a raise can sometimes cut your income overall, in the long run, you are better off with the raise.

    As an example of a raise cutting your income, years ago, I received a raise that put me just over the limit for the Earned Income Tax Credit that I had gotten the year before, and this credit exceeded the amount of my raise.

    However, having a higher income puts you in a better position for the next raise or when you go to start another position.

    My friend had applied for a job and was offered it at $65k. This was lower than her salary, so she refused the position but mentioned it to me. I applied for the job, and at the time, I was making significantly less than that. In the interview, they told me the salary range was $60-$65k.

    I was called back for a second interview. The owner asked me for a copy of my W2 from the prior year, which I had never been asked for but saw that other applicants had been asked to provide it. Not wanting to risk losing the job, I sent it to him.

    The next day, he called and offered me the job--at $5k more than my W2 but more than $15k less than what my friend had been offered.

    I expressed my displeasure with the offer, and he said, "Well you were making less, and sometimes salary is based on what you were making before." I told him I disagreed and that the job should be worth a certain amount to him to have done, and that was the amount I felt I should be paid.

    He asked if I would have taken it for another $5k. I said I probably would have, and then he said he'd see what he could do, but I said I was no longer interested in working for him because of what I felt was poor treatment.

    Anyway, my point is that it's easy to see why you want the highest salary possible so that when you do change jobs, you're at a higher starting point.

    Not taking a raise, as that stupid author suggests, would translate to a huge amount of lost income over a person's lifetime.

    We Won't Let Republicans Replace Medicare with GOP Vouchercare!

    by CatM on Tue Sep 06, 2011 at 02:59:48 PM PDT

  •  Laura Laing is not the idiot here. (0+ / 0-)

    USA Today is the idiot for believing myths about tax brackets. Laura Laing didn't say that.

    In addition to all the people here who did point out that sometimes a few dollars do bump you over a line, not in taxes but in other things, Laura Laing is right. Even if it doesn't bump you over any line, there could be other things you want besides income increase.

    And, no, a better parking space doesn't have any sort of cash value, and hence, duh, does not need to be reported. I find this concept completely baffling. Who would think a space in a company parking lot has any sort of cash value? Someone has this confused with the concept of a company handing employees enough money to rent a street parking space. (Which does have to be reported...but can then be deducted, IIRC.)

    Just to be clear, no, a company saying 'You can put your stuff on this part of our property while at work.' is not any sort of benefit you must report on your taxes, and the very idea is idiotic. Oh, look, they gave you a locker to put your clothes in, better report that....what's a bus locker renting for these days? (And why aren't all those teenagers paying taxes on their school locker?)

    Neither do you have to 'report' flex time, or having more vacation days, or getting a nicer office, all of which might be something you want instead of a pay increase. And those things should be compared after taking taxes from the pay increase.

    And, of course, health insurance is excluded from that, although I've never heard of anyone asking for better health insurance in liu of a raise.

    •  Laura Laing's words (0+ / 0-)
      Getting a raise is always a good thing, right? Well, not always. If that extra cash in your paycheck bumps you into the next tax bracket, you could be giving more in taxes to Uncle Sam than you'd like.

      Unequivocally false....

      yes...I blame Laing as well for nonsense...

      "But once John Boehner is sworn in as Speaker, then he’s going to have responsibilities to govern. You can’t just stand on the sidelines and be a bomb thrower." - President Obama, 12-07-2010

      by justmy2 on Tue Sep 06, 2011 at 04:40:28 PM PDT

      [ Parent ]

      •  It's not false... (0+ / 0-)

        Everyone is giving more to Uncle Sam than they'd like.  It's a given, nobody likes to pay taxes, even those of us who realize they're necessary to create the society we desire.

        What Laing is IMPLYING is that the increased taxes will result in a decreased net income, which is patently false, but that's not what she actually says.  "More than you'd like" is a mealy-mouthed Get Out Of Jail Free phrase that you can say about virtually anything.  Any reporter quoting such a phrase should be fired....even if they do work for USA Today.

        •  I have no idea... (0+ / 0-)

          ...how anyone is reading that into her statement, considering premise of the book is to calculate that amount.

          So she said: Hi, I'm here to lie by implication about something in a sentence hidden inside my book, for no apparent reason, as this isn't any sort of political book, but a book to fight the growing issue of adult innumeracy. Then I will provide a bunch of simplified math to show how this lie is, in fact, a lie.

          Seriously, that's what you guys think is going on?

          Or, more likely, USA Today lied and then grabbed some random books and looked for someone else to blame the lie on, and found a sentence they could quote out of context that somewhat sorta implied what they said, if you looked at it with the assumption that it did imply that.

          And reporter quoting such a phrase in that context should be fired. Someone saying it as they explain how tax brackets work and how to calculate that amount? Not so much.

          I swear, it's amazing how a single sentence buried miles deep in a book is somehow misleading if you selectively quote it and pretend it says something it quite literally does not say at all. Yes, we know it's possible to imply a lie while stating the truth, but did you know that it's also possible to imply something is a lie by quoting it completely devoid of context? Wow, who would have thought that?

          Laura Laing herself showed up in the USA Today comment thread: This issue is covered correctly in Math for Grownups. But I'm so glad that you pointed out this very common misunderstanding. The example from the book considers whether or not non-taxable perks and more paid time off might be a better deal than the raise itself. Folks may assume that a raise is the best option--however, there are many ways to negotiate with employers so that more money is kept in your pocket!

  •  They have been promoting this lie (2+ / 0-)
    Recommended by:
    Marie, Calamity Jean

    For a long time, for as long as I can remember.  It isn't that people can't do the math.  They are being lied to about the formula.

    I went through this when I first moved out of the house.  I had to go to the charts and prove it to myself what marginal taxation meant.  Nobody around me where I grew up seemed to know that.  In fact, they instead were telling me this particular lie.

    USA Today doesn't "believe" this lie, it is propaganda, it's part of how the billionaires are fooling the masses.

    People do not understand what "marginal" means and the mass media is going to protect that like a trade secret.

    Republicans: Taking the country back ... to the 19th century

    by yet another liberal on Tue Sep 06, 2011 at 04:41:35 PM PDT

  •  Fails under own numbers... (0+ / 0-)

    Top-end cappuccino machines cost between 2 and 3k. The shitty one your company would put in the break room costs about 60 bucks. I have absolutely no clue how to value marginal inches or feet between parking spots so i'm just skipping it. Under these numbers, you would literally end up better off if you bought your own high-end cappuccino machine, stored it in the break room, and took a week (or more) of unpaid vacation.

    I have sworn upon the altar of God, eternal hostility against every form of tyranny over the mind of man. - TJ

    by ABTice on Tue Sep 06, 2011 at 05:07:20 PM PDT

  •  There's a small grain of truth to Liang's argument (0+ / 0-)

    If a raise bumps you up a bracket, your take-home pay, while it won't decrease, won't increase by the same percentage as the nominal raise would imply. That becomes a consideration if getting the raise means working longer hours, doing less pleasant work, or the like; you're making a tradeoff and you have to base that tradeoff on the actual increase in your take-home, not the nominal increase in your gross pay. For some people in some cases, the tradeoff might be worth it at the nominal rate but not at the effective rate. She could and should have made this point better.

    "We recommend, as a precautionary measure, that people with respiratory infections should be advised not to blow their vuvuzela in enclosed spaces and where there is a risk of infecting others."

    by ebohlman on Tue Sep 06, 2011 at 05:33:54 PM PDT

    •  Of course (0+ / 0-)

      The new tax bracket should be taken into consideration along with everything else, and the book's not wrong for pointing that out.

      But the effect of an effective tax increase on the amount of a raise that exceeds a bracket is so trivial I can't imagine how it could possibly affect anyone's decision.

      It seems to me that the real takeaway, the one the author should've focused on, is making sure to calculate the tax rate for any raise. If you get a $6,000 raise¹ and you're in the 25% bracket (<$85,000 for single²) you're paying $1,500 in taxes. Is it worth a $4,500 raise vs. benefits or whatever? Sure, that's a fair question. The difference between $6,000 and $4,500 is substantial and an enthusiastic person might be so excited about the raise he doesn't take the real raise into account.

      If you cross over the bracket you're paying between $1,500 and $1,680 in taxes. If you just barely cross into the bracket it could be $1,670. According to the author the difference between the $4,320 or $4,360 or $4,400 or $4,490 rate (depending on how much of the raise crosses over the bracket) vs. the apparent $4,500 rate is such a big deal a "grownup" would consider rejecting the raise. I just don't see this as worth discussing.

      The author screwed up her own case, in my opinion, by focusing on the misleading bracket issue instead of the general issue of taking tax into effect. But she drew attention to her book by doing it, so good for her, I guess.

      (¹) you're probably not the kind of person who needs a book called "Math for Grownups"
      (²) forgive me if I screw this up, my point is good even if my math is sloppy

      "Only idiots believe the earth is getting warmer. Besides, they've proven it's only getting warmer because of sunspots."

      by Carnet on Tue Sep 06, 2011 at 11:35:37 PM PDT

      [ Parent ]

  •  May Tea Partiers don't understand tax brackets (0+ / 0-)

    I've had several conversations with friends and acquaintances who are under the same delusion -- that being bumped into a higher tax bracket means you pay the new rate on all your income.

    The reason people support the flat tax concept is because they're just not very good at arithmetic and not good at all at simple algebra.

    Honestly, if you gave freshmen GOP congressman a high school algebra quiz and forced them to pass it before they could vote, the house would never get a quorum. (If they could calculate what a quorum is, of course.)

    Some people are intolerant, and I CAN'T STAND people like that. -- Tom Lehrer

    by TheCrank on Wed Sep 07, 2011 at 10:35:01 AM PDT

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