Hard work = $250,000 ?
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| Fri, 10-24-2008 - 9:07am |
I’ve read repeatedly that the $250,000 is hard earned money that the government has no right to tax. Personally, I don’t believe that hard work consistently results in high salaries and I’m not convinced that people who make more money work harder or deserve more than most people. Most people, I believe, do work hard and most people are rewarded with 25,000 – 45,000 salary. Not all some hard workers make more and some make less. What do you think? Is the Just World view valid?
http://www.princeton.edu/~rbenabou/beliefs7csend.pdf
most people have a strong need to believe that they live in a world that is just, in the sense that people generally get what they deserve, and deserve what they get. When confronted with data that contradicts this view they try hard to ignore, reinterpret, distort, or forget it —for instance by finding imaginary merits to the recipients of fortuitous rewards, or assigning blame to innocent victims.
Because of their imperfect willpower, individuals constantly strive to motivate themselves (or their children) towards effort, educational investment, perseverance in the face of adversity, and away from the slippery slope of idleness, welfare dependency, crime, drugs, etc. This is another recurrent finding from the sociological evidence. In such circumstances, maintaining somewhat rosy beliefs about the fact that everyone will ultimately get their “just deserts” can be very valuable. Furthermore, if enough individuals end up with the view that economic success is highly dependent on effort, they will ultimately represent a pivotal voting block, and set a low tax rate. Conversely, when individuals anticipate that society will carry out little redistribution, the costs of a deficient motivation to effort or savings are much higher than with high taxes and
a generous safety net. Each individual thus has greater incentives to maintain his belief that effort ultimately pays, and consequently more voters end up with such a world view.
For instance, data from the World Values Survey shows that only 29% of Americans believe that the poor are trapped in poverty, and only 30% that luck, rather than effort or education, determines income. The figures for Europeans are nearly double: 60% and 54% respectively. Similarly, Americans are more than twice as likely as Europeans to think that the poor are lazy (60% versus 26%).
Indeed, 59% of Americans agree or strongly agree that “in the long run, hard work usually brings a better life”; this view commands much less support in Europe, ranging from 34% in Sweden to 43% in Germany.
Is the “American dream,” according to our theory, just a self-sustaining collective illusion?


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Quite certain, I haven't make my point, sorry, I'll clink post anyway. Let me know if you can make any sense of it."
As I said before, 250K won't come close to buying a one bedroom, one bath condo in certain areas of the country. Now a 3 bedroom home with a postage stamp yard is possible with a hefty property tax bill and about 600K or more. That 250K dwindles down quite quickly after taxes.
Budgeting and sacrifice are just semantics IMO but I realize that someone who has never seen 250K might think it is like winning the lottery. It really isn't though, depending on where you live. And it isn't at all true that a mercedes is in every driveway. Nor do people even go to a nice restaurant once a month. Or go on a carribean cruise, one I see you will partake in. Their closets aren't filled with Jimmy Choos either. They are too busy paying enormous property tax bills, supporting elderly parents in addition to their own family, driving the 5 or 6 year old car, trying to build a retirement account, paying enormous college tuition bills, etc. I'm not saying they don't get to have a rather comfortable lifestyle, but there are dramatic differences depending on the cost of living where you live and a lot of those people tighten their belts, even with the 250k+ salary.
The point I am trying to make is 250K is spent very quickly in an area of the country where costs are high, property taxes are high, etc. That same 250K would allow you a much more cushy lifestyle in other areas of the country but may be much harder to earn that salary in say rural area North Carolina. Losing almost 45 percent of your salary right off the bat makes that 250K number much less attractive. And I don't consider someone earning 250K necessarily "wealthy".
Edited 11/6/2008 7:17 am ET by noodles2d
Can you explain how you arrived at a 50% federal income tax rate?
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Why is it unfair?
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I agree with you up to this point.
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I hope you don't think that's true for most people though.
Well said.
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