Monday, April 6, 2009

Gain is Gain

I was changing radio stations the other day when I caught part of a conversation deriding and bemoaning the new tax burden on those that make over $250k annually. What I found interesting was that this conversation was taking place on one of the so called “christian” radio stations that dot the lower end of the dial.

Now it’s not that Christians and/or their radio stations should not delve into secular areas such as money, its that they were poisoning the well with incorrect, or in this case, downright stupid information. A cynical person or one who sees a conspiracy around every corner might just come to the conclusion that these “christian” radio stations are nothing more than a mouthpiece for the neocon point of view on how our country should be run. I think that a lot of folks have gulped down the kool-aid and will believe anything as long as it is wrapped in “Christian” or “Conservative” labels no matter how ill-advised or wrong it is. As Forest Gump would say “stupid is as stupid does.”

Here is how the conversation went:

“…so what this new tax is going to do is stop people from wanting to earn more than $250K”

“you mean make sure you earn no more than $249K?”

“well I would recommend stopping at $240K because Congress could lower that amount in the near future.”

If your wealth is at a point where you would actually consider this as sound advice then you either came to your wealth by a) winning it or b) inheriting it.

There is usually a point where a new tax rate takes a bite out of the income earned over the tipping point amount, but that balances out quickly as more income is earned so that you soon have a positive gain. To recommend leaving $10,000 dollars on the table because of a new higher tax rate or to actually quit earning income when you reach $249K is nonsense. And you want me to take your advice on my salvation?

Yes taxes influence behavior, more than they should in my opinion, but it is a reality nonetheless that is not served well by stupid advice such as this. To stop accumulating wealth because you don’t want to pay more in taxes means you end up generating less wealth. Why would you want to do that? Taxes come and go, they are a fact of life that will never go away. You pay them until you can change them – you take the ups and downs and move forward. One should always focus on net gain not focus on what is lost or “could have been made if only ……”.

Gain is gain.

1 comment:

Sam said...

Do people just not understand taxes? After 250k you are put in to a new tax bracket. The money you make AFTER 250k. No one understands how it works, it's all done by brackets. For example from 0-10000 it's 10%, from 10000-50k is 15% and so forth. After 250k, you are still earning more money.