wjm@whuxj.UUCP (MITCHELL) (03/29/84)
Unless the maximum tax bracket is >= 100%, you are always better off earning
additional money, since you will still have more money in your pocket after
Uncle Sam takes his cut. As mentioned in an earlier article, the U.S. tax
brackets are a piecewise linear CONTINUOUS function, so that the higher
bracket only starts at the END of the lower one. If you look at the Tax
Rate Schedules (X, Y, or Z) in your 1040 instructions, you'll see that the
taxes are stated as:
$ xxx + yy % of the excess over $ zzz (up to $ www)
and that xxx is the summation of all taxes contributed by the brackets
below the one you're in. Sure, additional income may push you into a
higher bracket, which means Unc takes a bigger slice of the LAST buck you
make, but you'll still have more money after Unc gets done.
CAVEAT -- this only applies to taxes in the United States of America.
It may NOT apply to foreign tax systems.
Only 17 days left to file your Form 4868,
Bill Mitchell
Bell Communications Research, Inc.
Whippany, NJ (whuxj!wjm)dave@utcsrgv.UUCP (Dave Sherman) (04/01/84)
Bill Mitchell's description is essentially correct for Canadian
tax law also; the marginal rate never exceeds 100%.
(Anyone interested in free [for now] CAI which teaches the Canadian
income tax system, drop me a line or call me at (416)947-3466.)
Dave Sherman
Toronto
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{allegra,cornell,decvax,ihnp4,linus,utzoo}!utcsrgv!dave