I have employed about 50 people during the last 20 years, and my family’s taxable income is about $300,000. In order to avoid paying a higher percentage of taxes on all of my income, I will decrease output, lay off some staff and still end up keeping the same amount.
I have no incentive to hire people or expand my business, because the more I make, the more President Obama will take to expand government. This discourages expansion of the private sector. It will backfire with disastrous consequences for all.
It is repulsive that Obama is being allowed to take this country backward by pickpocketing the very people who run the private sector through their energy, money and creativity.
Kay Santos
Diamond Bar
Michelle Malkin reported on this letter on her website, eliciting the following comment:
Comment #11 on March 4th, 2009 at 2:00 pm
lgm said: Both you and the LATimes have been punked. This letter is a hoax. As long as his marginal return is positive he has an incentive to make more money. If he really were in business he would know that.
Uh, sorry lgm, although I have no direct knowledge of its authenticity, the letter is quite likely real. My wife and I are “going Galt” on much less income. With a $300,000 pre-tax income and a marginal tax rate approaching 70%, I’m rather certain that Kay Santos, like myself, can find more rewarding things to do in the time it would take to earn the 30 cents that marginal dollar is worth.
You might want to consider re-taking Economics 101 at your local community college.
Although I agree with Rand, this guy's argument is not sound. Increasing your pre-tax income never decreases your post-tax income. If you make $300,000 a year at 10% and the next bracket is 20%, then if your income rises to $301,000, you only pay $30,200 in taxes, not $60,200. Make sense? However, Obama is destroying the economy in spite of the complications of our tax system.
ReplyDeleteI think the commenter misunderstands the point - the marginal rate applies to the next dollar earned; not the total dollars earned.
ReplyDeleteCase in point: Kay Santos spends a certain amount of effort to earn the three hundred thousand and first dollar. The tax on that dollar is roughly 40 cents, federal; 10 cents, state of California; 8 cents, FICA and Medicare; and a couple of cents more for miscellaneous taxes. Total, about 60 cents, so Kay Santos has about 40 cents left to spend.
"Going Galt" is the cost/benefit decision associated with the effort to earn that extra 40 cents. For Kay Santos, the threshold appears to be $300,000; for me, it's much lower.