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People don't understand taxes

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  • #16
    Originally posted by gvs.psych View Post

    True. But I can't think of anything where it is so common that about 2 hours worth of knowledge could have such a dramatic impact on peoples lives. I was talking to a friend the other day who was telling me about how he didn't want a raise because he didn't want to go into the next tax bracket. I told him that's not how tax works and he said 'in France it's different'. He is a smart guy with a masters degree. I googled it after though, he was still wrong, France also has marginal tax brackets
    He is right about some stuff: France is different!

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    • #17
      I was in the self check-out line of Home Depot several years ago and the person in charge of the lanes started talking about taxes. I can't remember what brought it up. I pride myself on not initiating small talk with strangers so I know it wasn't me. Any who, they were talking about how their manager was doing them a favor by not giving them a raise because it would push them into the next tax bracket and they would end up taking home less. I would be surprised if the manager was so far ahead of the game that they understood the tax code and was just using that as an excuse. Nonetheless, it made me feel bad for the employee and, likely, the manager.

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      • #18
        Originally posted by CordMcNally View Post
        Any who, they were talking about how their manager was doing them a favor by not giving them a raise because it would push them into the next tax bracket and they would end up taking home less.
        Not surprising. Would have to think this thought process is (un)surprisingly common.

        Originally posted by CordMcNally View Post
        I pride myself on not initiating small talk with strangers so I know it wasn't me.
        Best part of the story LOL.

        Same MO here.

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        • #19
          Originally posted by Tangler View Post
          He is right about some stuff: France is different!
          Bonjour!

          https://youtu.be/FUjGf2Grrus

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          • #20
            Originally posted by CordMcNally View Post
            I was in the self check-out line of Home Depot several years ago and the person in charge of the lanes started talking about taxes. I can't remember what brought it up. I pride myself on not initiating small talk with strangers so I know it wasn't me. Any who, they were talking about how their manager was doing them a favor by not giving them a raise because it would push them into the next tax bracket and they would end up taking home less. I would be surprised if the manager was so far ahead of the game that they understood the tax code and was just using that as an excuse. Nonetheless, it made me feel bad for the employee and, likely, the manager.
            this is shockingly common in my experience.

            it's also surprisingly difficult to explain marginal tax rates to someone who doesn't intuitively grasp them.

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            • #21
              Originally posted by MPMD View Post

              this is shockingly common in my experience.

              it's also surprisingly difficult to explain marginal tax rates to someone who doesn't intuitively grasp them.
              How often are you going around explaining taxes?

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              • #22
                Originally posted by MPMD View Post

                this is shockingly common in my experience.

                it's also surprisingly difficult to explain marginal tax rates to someone who doesn't intuitively grasp them.
                It’s actually pretty easy. The difficult part is watching their reaction when they realize all the mistakes they’ve made previously not understanding this simple concept.

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                • #23
                  basic personal finance and basic tax code.
                  We should all learn in high school, if not earlier.
                  Last edited by Tangler; 08-19-2022, 04:17 PM.

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                  • #24
                    Originally posted by Anne View Post

                    It’s actually pretty easy. The difficult part is watching their reaction when they realize all the mistakes they’ve made previously not understanding this simple concept.
                    How many times do people not understand the difference between a tax refund/balance due and total income taxes paid?
                    Enough said.

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                    • #25
                      Originally posted by Tangler View Post
                      basic personal finance and basic tax code.
                      We should all learn in high school, if not earlier.
                      Amen.

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                      • #26
                        Originally posted by Tim View Post

                        How many times do people not understand the difference between a tax refund/balance due and total income taxes paid?
                        Enough said.
                        Or a tax deduction, which for some reason everyone thinks is a tax credit.

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                        • #27
                          Originally posted by Tangler View Post
                          basic personal finance and basic tax code.
                          We should all learn in high school, if not earlier.
                          If they can't teach reading, writing and math just how do you expect them to teach how to balance a checkbook? Let alone social sciences or the new gender identities? Or "activist skills"? Or the new civics classes?
                          Actually, a niece has a child in the new 3 year old preschool programs. What they actually do is teach the child the "parenting lessons" that the teachers wish to impart.
                          Personal finance and tax code are beyond the capability of our system. Dumb it down.

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                          • #28
                            Originally posted by bovie View Post

                            Or a tax deduction, which for some reason everyone thinks is a tax credit.
                            Or I'm not going to work overtime because it all gets taken out in taxes.

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                            • #29
                              Originally posted by MPMD View Post
                              it's also surprisingly difficult to explain marginal tax rates to someone who doesn't intuitively grasp them.

                              A couple of related issues I have dealt with in relation to taxes.

                              1. Employees who think that if there is a $1/hr increase that will lead to a $80 increase in biweekly paycheck. They get upset that the fed and state taxes rise disproportionately when you get more and that FICA and Medicare continue to take a big chunk of the payroll. All you can do is explain, and then throw up your hands and say " ask the IRS".

                              2. People who work extra hours and moonlight and find that all those extra hours did not bring about the amount of money per hour as their regular job did. At some point you are killing yourself more working those hours for that smaller and smaller increase. At what point would you want to work less depends on your mindset, and partly your age.

                              I once read that Sweden ( or another Scandinavian country) had such high taxes that people figured that will be getting almost 80% by working the bare minimum of 4 hours than to work the full 8 hours for 100%. So they cut down their work hours and the productivity declined significantly. The government had to cut down the marked increases in marginal rates to make people work more than 4 hours.

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