PacNorWest wrote:I spoke with the pharmacist this morning while picking up a script for liptor.
The Liptor copay card for $4.00 isn't valid with Medicare. . .the cost was $15.00 (30 day supply) - so I asked about that and why.
That led to another conversation about how he was going to cut back his hours when the new healthcare plan became effective.
Why is the pharmacist cutting back his hours?
Because it keeps him in a lower tax bracket according to him.
It sounds like diminishing returns for hours worked is in effect.
This attitude is often because upper income people don't understand marginal tax rates. They believe if they go into another bracket, all income will be subject to the higher rate, not just the income above the threshold level.
He might be making his decision base upon other factors:
* Starting Jan. 1, 2013 individuals making more than $200,000 per year (and couples making more than $250,000) will face a 0.9 percent Medicare tax increase on wages
above those threshold amounts.
* Those same people face an additional 3.8 percent tax on investment income
* Under current law, the government charges a tax of 2.9% on wages and self-employment income. For employees, your employer covers half of that tax, and the other half is withheld automatically from your paycheck. That rate will soon be raised to 3.8%
for single filers who have earnings of more than $200,000, and for joint filers, the limit is $250,000.
At a certain age, he may feel that taking more time off and giving less to Uncle Sam is an acceptable tradeoff.
“The only place where success come before work is in the dictionary.” Abraham Lincoln. This post does not provide advice for specific individual situations and should not be construed as doing so.