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).
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?
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.
“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