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Is there a maximum marginal rate beyond which would curtail working as a doc?

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  • #16
    I already work part time. If the taxation goes up substantially I might just retire completely and do the occasional work / medical volunteering to keep my license alive.

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    • #17
      my entire salary, even now cutting back is taxed entirely at current marginal rate.   i have no state tax...my hunch would be if i'm pocketing less than 50% of my income...i might as well call it quits completely.

      i think that is one of the pitfalls of pushing up the marginal rates...many of these people (which would include even us) could just throw in the towel and live off our investment income (which hopefully would still be a lower %..at least lower than ordinary rates)...essentially lowering how much all these people throw into the tax pool.  The increase would be a disincentive to continue to be a hefty taxpayer.    Let's say i pay $130 in annual taxes (made up number)...if i quit now vs working another 10 years that is a minimum of over a million dollar tax loss to the government....and that is just me......

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      • #18
        When I was fresh out of residency and a massive supersaver, not only did I think I was paying too much income tax, but I didn't like how little a percentage of my savings I could put in tax-protected space.  Even now, well over half of my investments are in lame taxable accounts, some in subpar ETF's I can't really sell due to low basis.  I'm up to nearly ~$20,000 in taxable dividends a year and wish I had a way to stuff more of that money in my 401k or even better my Roth IRA.

        If your goal is to hit some dollar number in your investment accounts then punch out, working less not only saves you income taxes (and is thus more efficient), but also allows you to put a higher percentage of your investments in tax-protected space.  This can be advantageous for tax planning, retirement spending, and estate planning.

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        • #19
          We're already there.

          From a personal standpoint, I already encourage my doctor spouse to not take any additional shifts, call, etc.-- it's just not worthwhile after taxes come out. Ultimately the plan is to go to something like .8 time or half time (and of course retirement).  And these rates are great compared to pre-86, and anything the left is proposing.

          Yeah at some point employers will be forced to pay their employees as "subcontractors" etc but eventually that loophole will be closed.

          At higher echelons, earned income will find ways to be treated as "capital gains."  But for the rest of us, it will separate the haves from the have-nots even further.

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          • #20




            I really wish we would get to a point as a forum where we spent as much time worrying about actual, current financial policy as we do about early primary proposals. I’m not holding my breath on this.
            Click to expand...


            MPMD, I completely agree with you on the one hand.  On the other...I am concerned with the seemingly widespread acceptance of "the rich should/will pay for everything" mentality.

            As for Vagabond's question, I suppose there are two issues:

            1) It makes it harder to reach "enough."

            2) When you have "enough" you're more sensitive to being squeezed.

            The brackets matter for me, but I also have the luxury of being able to respond to them.  So for me, it is more the brackets as opposed to the rate that matters.  So far, my un-rich part-time income seems to be (mostly) excluded in proposals that I have seen.  (Earned income, at least.)

            From my observations, most docs do not understand taxes nor do they have the financial/lifestyle ability to worry about the marginal rate.  Therefore, I doubt that we'll see much change in the overall workforce--aside from the death by a thousand paper cuts type of thing.

            I've been lambasted here before with my "Who is John Galt" refrain...but I already have one foot out the door and the momentum is in that direction....

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            • #21
              Shift more of one's income stream to tax free (ie. bonds), tax deferred (business and real estate appreciation to wait out a high tax president), real estate and equipment tax depreciation, and long term capital gains. One can hold off selling real estate or a business during the term(s) of a high tax president.

              If employed, one can consider quitting their job and finding a higher paying position so that after tax income doesn't suffer, especially if your pay is below average. That may involve considering the impacts of geographic arbitrage, including a move to a no income tax state which also tends to come with higher average physician pay and to low COLA/sales tax areas on necessities (housing, food, clothing, property tax, education, labor (think babysitting and car repairs) etc.)

              If one owns a practice, the growth of the practice can offset tax increases by mitigating or preventing altogether take home decreases.

              I would not give up one's passion over income concerns, unless I found a new passion to pursue. I'd feel selfish and probably a loss of identity. I'm probably FI, so it's more palatable for me to work for purpose with any future income being a secondary benefit.

              Higher taxes will impact those who are new in their career hardest. They generally don't have as many options (ie. business ownership), limited NW, certainly not FI. With less take home in a higher tax environment, the benefit of compounding can be significantly reduced over the decades.

              That being said, I don't believe that even a Democratic president will have the will to materially increase taxes on high (physician level) earners despite the primary talking points which sound good to the voting poor.  Many high earners and billionaires are their constituents.They'll likely target big corporations over individual incomes. I'm more concerned with the prospect of a healthcare monopoly not in terms of physician incomes but in terms of patient access to quality care.

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              • #22
                You are all underestimating E Warren's wealth taxes and investment taxes. Planning to live on your investments is going to get much more expensive when she is president.

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                • #23
                  She will never be president but aoc might

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                  • #24




                    She will never be president but aoc might
                    Click to expand...


                    I agree aoc may be a rising star, but she can't run now and she can't run in 5 years. The earliest she can run is in 9 years.

                    Hard to see an incumbent losing next year if the economy remains relatively strong. So we probably won't have to worry about higher taxes for a few years.

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                    • #25
                      •financial- how much is enough?
                      •emotional- is it worth my day to work ?

                      The greater the former, the less likely the latter is “no”.
                      Then it becomes “parttime “, side hustle, second act vs maximizing revenue vs longer making less. Depends again on the former and latter as long as any compensation is involved. At some point, most step off the merry go round.
                      “I am making too much money and paying too much tax.”
                      Looks silly on a letter of resignation.

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                      • #26
                        I'm already at a marginal rate of 49.3%, plus 3.8% NIIT on capital gains.

                        If my W2 job wasn't so high paying, I would be looking heavily into rental RE and taking a lower paying job as an IC, or do locums. As it stands right now, I have to build some wealth for 5-10 years before I can transition out of it.

                        However, if a new president/Congress does ultimately increase payroll or investment income taxes, I would have to leave CA.

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                        • #27
                          My combined state/federal marginal rate is almost there, but once the rate gets much above 50%, it starts to feel much less rewarding to hustle to earn more.  Even though we are financially independent, it remains in my DNA to work hard and earn money.  These days, you will often find us playing hard, but in between playing hard I still like to work hard.  Yes, I enjoy the work and it makes me feel needed and useful, but honestly I also like the money.

                          In thinking about shift work for docs, the hardest shifts to fill are the undesirable ones.  Once you get to onerous marginal tax rates it will get a lot tougher to cover those open weekend and night shifts when the net take home pay is low.

                          In contrast, if I am not earning from the sweat of my brow, but rather have the opportunity as a business owner to make large profits and have to pay lots of tax, high marginal rates likely would not change my behavior much because the income is passive.  That is in contrast to working in the hospital on a Saturday night.

                          If someone is going to pay $2400 for an overnight shift on the weekend, there are currently docs willing to take it for the pay.  If, however, you were to take most of the money away in taxes with only $800 take home left, good luck finding volunteers to get out of bed to care for the sick on a Saturday night overnight shift.

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                          • #28
                            If I only get to keep 40 cents on the dollar, then I am going part time.  I welcome this because it is the push I need.

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                            • #29
                              Like others, my marginal is already pretty high, so it wouldn't change anything right now.  When I'm older, it might affect when I choose to cut back.

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                              • #30
                                Hopefully someday us primary care folk will be able to complain about our high marginal rate!

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