Good thread. The OP appears to have deleted all of their posts though!staythecourse wrote:Interesting this in itself should be its own thread. It is AMAZING if you look at the numbers of how much being at the top bracket affects your pay. Basically, what I tell folks the last 3 months or so folks are working for 1/2 the reimbursement as they did from Jan-Jun. Taxes (fed+ state) in many places are 50% or more.sambb wrote:You shoudlnt look at compensation. Instead, it is compensation by hours worked. I know two MDs. One works 12-14 hour days, 6 days a week, 365 days a year, and rarely takes vacation. he makes 2x as much as another MD in the same field, who works half as hard. So ultimately, they make the same.
Also, the amazing thing is pull out a calculator for those who sent to daycare and/ or have a nanny how much GROSS income at the top bracket is needed to pay them. For example: If a nanny cost 40k you are basically taking 70+k of your salary just to pay the nanny. If one has multiple kids at different stages (day care, private school, nanny, or any combination) the GROSS salary to pay for all of it easy exceed 100k+. That is insane.
Reading what WCI wrote several years ago really got me thinking that for high income workers it makes more sense to work part time and for more years then trying to go all out and retire early. To save every extra dollar in the last 3-6 months of the year is exceedingly more difficult as you have to overcome the progressive tax system. Had my wife and I thinking and we have started making changes to work schedules to spend more time with kids (which is what we really like anyway).
I am in one of the IM procedural subspecialty fields mentioned. Presently, there still exist opportunities to earn more (mainly by doing more procedures but also through ownership of ASCs or ancillaries). The landscape in healthcare in 5 years after applying for and completing a 3 year fellowship may be not as attractive though. I agree with the other posters who recommend optimizing your income in your existing field, settling in a lower cost of living location, and/or pursuing a different field for not purely financial reasons.
Regarding the progressive tax structure, I agree it has a greater impact on dollars earned as you climb the brackets.
However, what can be even more important for practice owners is the impact of fixed costs/overhead. In my group, I will pay pretty much the same full overhead whether I work 9 months or 12 months. We do have an allowance for doing 50% time with another person (and each paying 50% of a share of overhead).
If I have $200,000/year in fixed costs
and generate $800,000 in revenues working 12 months - my take home is $600,000 (roughly $288/hr)
and generate $600,000 in revenues working 9 months - my take home is $400,000 (roughly $256/hr)
Working those last 3 months are actually the most lucrative by far BEFORE taxes. (roughly $385/hr)