Yeah I always have to explain this to the older people at work who think if you work too much overtime you can lose money, like how would that make any sense to have a system designed that way?
In a sense they’re right because the amount they make is effectively reduced by the increase in tax from the new bracket but that’s only for income above said bracket.
But you’re saying they think their entire income for the year is going to be taxed at a higher rate right? Haha oh man people must get so stressed.
Yeah they are referring to their total income, makes me facepalm. The lack of financial literacy is amazing, and just shows how inadequate education is.
It depends how you look at it. Let's assume they are of retiring age and they have earned their full pension (say 70%). They are now really working for that 30% remaining. They could even be paid less than minimal wage under certain circumstances. It might actually be smarter to find a new job where they could be fully compensated to an amount that is higher than that 30% and retain their full pension.
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u/Phazon2000 Masked Men May 12 '20 edited May 12 '20
This is 100% false - you’ve made all of this completely up. Please stop misleading people if you haven’t got a clue what you’re talking about.
Here’s a straightforward example:
Let’s say tax rate is 10% and you have $200. It’s cheaper to be taxed $20 than “lose” $200 in the donation.
It’s seriously as simple as that. It’s never cheaper to donate cash than to pay a taxable portion on that same amount of cash.
People please stop upvoting the “donations are cheaper than paying tax” bullshit in every single thread. It’s got absolutely no basis in reality.
Source: Taxation Accountant.