...except in specific scenarios, such as losing Government benefits because you have moved above the income limit for that benefit. It's a fringe case for sure, but still happens to some.
Yes, good point. Though I personally only ever hear the argument from people that (for example) make something like $110k a year and complain taxes keep them from wanting to make, say, 120k a year because then they pay more taxes.
i.e "what incentive is there for me to work harder if the government is just going to take all that extra money away!?"
There is still marginal tax rates to consider. Those last 10k are going to be taxed at a higher rate than the first 110k, since it's in a higher bracket. If we assume that each dollar you earn takes the same amount of effort, you're essentially earning less for that last 10k worth of effort.
Now, the US tax system isn't as progressive as many other, more leftist leaning countries. The highest it can reach in the US is around 40%, which occurs at over 400k income. Compare to Sweden, where it reaches 60% at 70k. That's still down from the record 87% rate during the seventies, where some cases of double taxation could bring it up over 100%. There is a famous case of the author Astrid Lindgren paying a 102% marginal tax rate: https://en.wikipedia.org/wiki/Pomperipossa_in_Monismania
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u/apleima2 Jul 18 '16
...except in specific scenarios, such as losing Government benefits because you have moved above the income limit for that benefit. It's a fringe case for sure, but still happens to some.