No Reason To Work Hard

President Obama wants to raise taxes on those who make more than $250k/year.

It is producing predictable results:

“We are going to try to figure out how to make our income $249,999.00,” [a Loiuisiana attorney] 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?”

Democrats will tell you: of course people will continue to work, regardless of what the tax rate is.  If you are making $250k/year, you are making in the neighborhood of $20k/month, or 1k/day.  So work an extra hour at (very roughly) $160/hour, and you can take home an extra $40 or $50 bucks!  Who wouldn’t work at $40/hour?!?

Well, most people earning more than $250k/year, for starters.

Everyone decides what their own time/effort is worth, within realistic parameters.  If the pay isn’t worth your time/effort, you find another job that is, or just plain quit.

Now, all that back-of-the-envelope figuring may not be accurate, but you can still play with numbers and get some sense of what’s actually happening.  Let’s say you earn $80/hour, on average under the current tax plan.  You get above $250k, and you still earn $80/hour.  You have established that your effort is worth $80/hour.  Now a new tax plan comes along.  It ends up telling you that the first 35 hours or so of work each week are worth $80/hour, but anything above that is now worth only $60/hour.  Why would you want to work at a discount?  Wouldn’t you choose to just work the hours that you are getting paid what you know and have proven you deserve?  And you especially wouldn’t be happy working at a discount in order to pay for another state’s pork, would you?  Because even if you are for progressive government help, it is a truism that everyone hates paying taxes for someone else’s boondoggle.

And that’s a good part of the reason Democratic wealth “redistribution” fails.  It is wealth destruction.  As I’ve said before, wealth is the product of effort combined with value, and money is the abstract symbol of that wealth that allows more effective bartering of wealth.  By redistributing money, you weaken the representation of the symbol, and you destroy wealth.

So maybe you get a temporary or limited benefit by the redistribution of money (which is the short-term distortion of the effort+value rewards system), but you destroy wealth.

Which is why socialism never works for long.  Socialism is a parasite that can only take root in a capital-rich society…and then kills the capital host by damaging the incentives for wealth creation.

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2 Comments

Filed under economics, leadership/parenting, Link of Admiration, philosophy, Politics, rant, Social Issues, Two Kinds of People...

2 responses to “No Reason To Work Hard

  1. I think you might overestimate most people, or underestimate in some circles. My sweetheart (love him dearly) would work (for the company he used to work for before it went out of business) overtime. With the taxes that are taken out for overtime, it was a waste of time logically. Yet he did it, he said it was good for the productivity of his crew, it wasn’t about wages.

    You are always going to have those that are trying to “beat” the system, but it seems to me that most people aren’t that way. As for the people worried about that know (minus the lawyers of the world) hope they don’t live in a place with high unemployment. 😦

  2. Two things… first know should have been now. (Silly me.)

    Second, it dawned on me “of course” that lawyers would do this. (Love you mom.) That is what they do, they try to beat the system. Legal work isn’t about who was right or wrong, legal work is about who can come up with the most compelling reason to say “yes” or “no” to guilt. (Thus “beating” the system.) Most people don’t think that deep. The ones that do I would say only half or so aren’t company men (like my sweetheart), that other half don’t work hard to begin with. Those are the ones that try to get away with getting paid as much as possible for the smallest amount of work possible. (As you describe.)

    However, those people have such a small view of the world (their own) they forget to realize that helping your company does help you. PERIOD… Such small views should be discarded. Those are the same people that take issue with paying for SSI and things like that, not realizing it is our duty to our parents/grandparents, and so forth…

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