In the comments to a post I wrote last week on the tax hikes in the Obama budget, someone named frontier2 got a lot of you (and me) riled up with his/her comments that he/she was “already trying to figure out how I can work less in order to make just under $250k.” Well, it turns out that this has become a popular meme among people who are (a) willing to engage in self-defeating behavior out of principle or (b) have no idea how the American tax code works.
Jonathan Chait at the The New Republic has taken the lead in documenting this plague of what he charmingly calls “wealthy idiots.” As he explains:
A tax increase affects the marginal dollar that a person gains. That’s means only every dollar over $250,000 is taxed at a higher rate. Obama is not proposing a tax system whereby somebody who goes from $249,999 to $250,000 suddenly becomes poorer. Nobody has ever enacted a tax hike like that in the history of the United States.
I’m through correcting these people. My new line is: Yes, you’re right. That socialist Obama is creating an insane tax code that gives people a massive incentive to stay under $250,000 a year. If you find yourself over before the next tax year, just write a check to me for the balance. Call it income tax consulting. (I should explain, given the level of awareness we’re dealing with here, that business expenses can be deducted from taxable income.) In return for this, we can split your tax savings 50-50. What a deal!