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Message: <blockquote data-quote="Werewolf" data-source="post: 2004711" data-attributes="member: 239">You are correct about marginal tax rates and how they work.However, you are forgetting that one has to work just as much if not more to cross the bracket.The Doctor referenced earlier cut back his practice to 3.5 days. Why? He made a rational economic decision.If he works 3.5 days to take home say $2000 after taxes he takes home $571 per day. If he works 5 days and as an example now takes home after taxes $3000 he is now earning $600 per day. So he had to work and extra day and a half to take home an additional $145. Depending on how he values his time and effort determines the decision he makes re: working more.Does that happen. Yes it does especially to those that are riding the line with earnings that put them very close to the next higher bracket. It happened to my father more than once in the 80's and got to the point where he told his employer to not give him a raise again until it would be large enough that he would actually take home more instead of less due to the raise pushing him into a new bracket. He was a very high income earner and ended up taking a raise about every third year. It saved him taxes and income.You may want to look into economic indifference theory for an explanation of the choices consumers make for a more detailed explanation as to why one would accept less income in order to pay less taxes, get more free time and less work.Its a complicated subject and is one of the fundamental foundations of economics.</blockquote>

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