Having a progressive tax system means tax rate increases disproportionately with the more work you do. And that’s a good because working less is encouraged by a reduced avg tax rate.
But what happens when you take a year (or 5 years) off? You live off savings that were taxed in higher brackets while earning zero. IOW, consider:
- Bob works 6 years straight earning 50k/year.
- Alice works 3 years earning 100k/year then takes 3 years off.
They both had the same gross earnings per unit time but Alice gets screwed on taxes because of the progressive tax system. My pattern is comparable to Alice due to forced full-time gigs that refuse part-time. My refuge is to subject myself to being over-employed for a stretch then quitting for a stretch of bench time. The only remedies I see:
- Take a 1-year contract starting in June. Do not work the first ½ of the 1st year, and do not work the second ½ of the 2nd year.
- Form a corporation, work as independent and direct your own “false independent” 1-person company. Money builds in the company as you pay yourself the same amount whether you are working or not. (Some people put the company in Hong Kong because it accommodates this well and the company feeds the director gradually and persists well after retirement – or so I’m told)
- Work in a country that adjusts for income fluxuations by giving you a tax credit if your income drops substantially from one year to the next.
I made up number 3. Does that exist anywhere?
Any other techniques to hack around forced full-time scenarios? Or to deliberately fluxuate working hard and not working without the tax penalty?
You could just pay your taxes of the current year at the actual tax rate and accept that you’re paying for society to function. That paying a little extra when you made more money is how a progressive tax system is meant to work.
…or you could go way out of your way to avoid paying an extra 3-5% by coming up with a sophisticated tax avoidance scheme like you’re some rich person where 3-5% is actually a large amount of money (that could’ve been used in any number of more useful ways than hoarding wealth).
That paying a little extra when you made more money is how a progressive tax system is meant to work.
You think the progressive tax system deliberately punishes people with unstable or fluxuating income? That’s foolish.
Whether that’s by design or not, no self-respecting anti-work proponent endorses it.
BTW, different countries have different tax tables, but 5% is ~100 hours. Would you like to work an extra ~1—2½ weeks per year for free? If yes, what are you doing in the anti-work community?
by coming up with a sophisticated tax avoidance scheme
The intellectual dishonesty here is atrocious. We’re talking about working less/minimally by leveling income across fiscal years (or achieving that effect) to avoid penalties for anti-work practices.
no self-respecting anti-work proponent endorses
“Overemployment” is how a rational person would finish that sentence…
I’m starting to doubt if you know o what either of those phrases means though…
You definitely haven’t read the sidebar in this sub
There are some models for sabaticals, like lower pay and then basically a year of paid vacation. It also includes insurance policies, as there is an obvious incentive to just fire you before you take the time off.
Also especially for long timeframes, consider FIRE. With a 50% savings rate it takes something like 16.6 years to retire. The idea is to invest into index funds and then live of the income they make aka become a capitalist. However I get why some people might not like that, but especially if you have some wealth from other source that might be a pretty great option. Also the 16.6 years use 4% save withdrawal rate, which has historically worked well, but if you are willing to return to work and take some risk higher withdrawal rates can work as well.
However companies do not like employees having wealth. It makes them independent and that means negotiating power. So most options probably do not work.
There are some models for sabaticals, like lower pay and then basically a year of paid vacation. It also includes insurance policies, as there is an obvious incentive to just fire you before you take the time off.
None of my employers have offered that. Colleagues would take a sabatical but I think it must have been uncompensated – just an understanding that the gig was held for them. Is there a particular region where this arrangement is common? If it’s just 1 year off every 7 years, that’d be useful but doesn’t match up to my pattern of working about ½ time on avg (1yr on, 1yr off, 1yr on, 1yr off, 6 on, 6 off, etc).
I know some German unions have managed to have it as part of the agreements they have with some companies and also the German government(as in people working for the German government). However it is rarely used.
I made up number 3
Mate, you seem to have made up most of you post including your own grammar and spelling rules…
I was going to try and help you understand.
My refuge is to subject myself to being over-employed for a stretch then quitting for a stretch of bench time.
But you’re also a habitual liar.
If that part is true, then that’s obviously what you’re asking about, just doing a terrible job of hiding.
Which makes me think the only way you’re “over employed” is one of those people who “hires” third world people to do your work remotely for pennies on the dollar.
You’re basically complaining that Roth 409s/IRAs exist, while couching it in terms relating to the lack of either Part-time work, or decent paying Part-time work, or rather, that’s the gist of the responses you’re getting.
Personally, the only solution I’ve found is finding full-time work I enjoy, but yeah, part-time gigs that don’t suck, at least in pay, are basically unicorns.
I might have ignored this post without all the anti-NEET, anti … landlords? company owners? contractors? … all the tears of people who seem to me to be in the wrong place, in the comments.
Wow, that dog-walker kid really did a number on this place.
You’re basically complaining that Roth 409s/IRAs exist
You’re basically saying “fuck Europe” (to use your technique of building a man made of straw). This is not a US-only forum. Roths are a US invention and they are US-specific. Canada has something somewhat like it but not quite (no conversion option IIRC, which blows it), and at least parts of Europe (if not all of Europe) have nothing at all like it.
Apart from that, it’s bizarre that you think I would have any problem with Roths. Where do you think you read that? Roths are a great tool that actually supports my goals – though in one country only. And only for as long as conversions are allowed, to the extent they are allowed, and to the extent of 401k limits and conversion limits.
I might have ignored this post without all the anti-NEET, anti … landlords? company owners? contractors? … all the tears of people who seem to me to be in the wrong place, in the comments.
Ah, so anti-work is an elitist movement that excludes some demographics of people you hate? Nonsense. Middle class people can (and should) practice anti-work philosophies. Please fuck off with the: this is for poor people only exclusivity. The geocentrism can fuck off too, particularly when simultaneously coupled with pretentious ass-hattery. Uber Eats contractors would be appalled with the prejudiced grouping you have stuffed them into. The poor people you want to restrict the anti-work movement to don’t have the 401ks needed for the Roth conversion approach to work for them.
YOU, are not the one I was calling lost here, and I DO NOT agree with the commenters who gave you shit(did you even read the end of my first paragraph?), but thanks for joining the circle of butthurt.
