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Okay I feel better about that rant now….!

October 11, 2010

 One of my favorite things to do on Sunday is to catch up on all my reading. Next to my night stand I stash magazines that have arrived during the week, unopened junk mail (I love the exercise of tearing open a bow flex advertisement and tossing it in the garbage across the room, I seldom make the basket though), various newspaper sections I’ve kept throughout the week (to read more thoroughly on Sunday) and any cards or letters from Mom (unless it is my birthday week and I open it for the $5.00 she always sends). Yesterday I read an article in the New York Times that made me see red. I generally don’t blog about my rants and raves on what other people say (unless it is related to something really serious like “The Jersey Shore” kids) but this article took me by surprise.

The article is in the Sunday Money section and it is called “I Can Afford Higher Taxes. But they’ll make Me Work Less.” It, initially, caught my eye because he says “So I thought it might be useful to do a case study on one of these high-income taxpayers. Fortunately, I have one handy: me.” So I’m excited because it looks like this guy was going to inspire me; not so!

His story is that he makes above $250,000 as a Harvard Professor and author of textbooks. He can also make more money doing various articles like this one he wrote. BUT because of how the tax law changes that will be happening 12/31/2010 , in particular the tax rates are  changing, he shows us via examples how it does not pay him to work because of the amount of taxes he has to pay etc. Another- words there are no incentives for him to work harder (or additionally in this case). He then goes on to say that the trickle down affect by him not working harder (or more) can affect everyone. “Maybe you are looking forward to a particular actor’s next movie or a particular novelist’s next book. Perhaps you wish that your favorite singer would have a concert near where you live. Or, someday, you may need treatment from a highly trained surgeon, or your child may need braces from the local orthodontists. Like me, these individuals respond to incentives. (Indeed, some studies report high-income taxpayers are particularly responsive to taxes.) As they face higher tax rates, their services will be shorter in supply.”

ARGHHHH!

My experience working with high income tax payers is that they generally will work more, find some tax loop, form corporations, raise their rates (maybe Julia Roberts will up her 12mil film fee to 15mil) all in order to get around feeling like (if in fact they are feeling that way) they are paying too much taxes. My experience is that these high earning tax payers don’t feel like they don’t want to work because they are paying more taxes; they already know they are paying more taxes and a majority of them take pride in that fact. For the writer of the article to imply that everyone (more importantly the everyday man making less than $250k that would be about 95% of the workforce) would be affected in this way is absurd. No one wants to pay taxes, no one wants to go to war, no one wants to hear bad news at the doctor, but some things are absolute. If Julia Roberts gets pissed off when the tax rates change and she ends up paying a bit more taxes, I do not think she will say “hell, forget the Oscar as I’m not working any longer because of the tax situation.” I don’t think that anyone that loves their work or has passion for what they do will act as such.

Not to jump subjects but let’s take a look at the taxpayer that has a child and goes back to work. The taxpayer puts the child in daycare and in some cases the daycare is almost as much as the taxpayer makes, but they continue to work. In the Harvard Professor’s story he may suggest the taxpayer not work as it is not worth it, tax wise. BUT, again, the taxpayer may work for other reasons.

Okay I feel better….If you have any tax issues like these that you need to talk about (or want to rant and rave) give us a call at 212-979-6830 or visit our website at www.gunwel.com . When Julia Roberts comes in for her appointment I’m going to suggest she keep working for her next Oscar.

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