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Location: Macroeconomics Unit IV and V - Inflation, Unemployment, and Economic Growth
Discussion: Taxes and Incentives to Work
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 anqxl |
Taxes and Incentives to Work
Apr 7 2008, 10:08 AM EDT According to the textbook, supply-siders focus their attention on marginal tax rates, and lower marginal tax rates make leisure more expensive. Why do you need to pay more for leisure when you have extra dollars? Do you find this valuable? |
 ElaineLung |
RE: Taxes and Incentives to Work
Apr 7 2008, 10:41 AM EDT Assuming we're at a point on the Laffer Curve where lower marginal tax rates would bring higher revenues, the lower rates don't make leisure more expensive. I believe the text says that the opportunity costs of leisure are more expensive -- that is, it's more "worth it" to work because the after-tax pay is higher than before. You aren't paying a higher monetary price for leisure. Do you find this valuable? |
 welkerjason |
RE: Taxes and Incentives to Work
Apr 8 2008, 10:32 AM EDT "lower marginal tax rates make leisure more expensive. Why do you need to pay more for leisure when you have extra dollars?"Angel, you raise a good point. The supply siders say that when tax rates are lower, the opportunity cost of leisure is higher, since every hour you don't work you are sacrificing more income than if you were paying higher taxes. For some, this also may mean that they can work fewer hours and have the same after tax income than at higher tax rates... I think there's no easy answer, it is all up to the individual's preference, leisure or income... which would you choose? Do you find this valuable? |
 tsaojames1991 |
RE: Taxes and Incentives to Work
Apr 10 2008, 8:54 AM EDT Ok, angel's question is already answered pretty clearly above, but anyhow ill still answer it in my own words. When marginal tax rates are lower, you can EARN MORE because you pay less tax. THUS, you give up more money when you DON'T WORK and goof off instead. Say the tax rate is 10% and your wage is 1000, the opportunity cost of leisure is 900 of disposable income, AS OPPOSED to when the tax rate is 5%, you give up 950% of income when u pursue leisure Do you find this valuable? |
 howardlin |
RE: Taxes and Incentives to Work
Apr 10 2008, 9:30 AM EDT Yes. i think it depends on personal preference, leisure or income...once ur above a certain level of income, it requires a much more sacrafice, a higher tax level, so you would have to work harder for that very little amout of addtional income on top of your normal wage. Do you find this valuable? |
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richardtu richardtu |
RE: Taxes and Incentives to Work
Apr 10 2008, 9:57 AM EDT well, personally i think, what they mean is like, i am willing to sacrifice my leisure time in order to yield a greater income. Therefore, when they have a greater income they have the ability to do more things later. SO according to mr.welker, it mianly depends on what peole prefer as their priority. Is it leisure or is it money? Do you find this valuable? |
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rksung rksung |
RE: Taxes and Incentives to Work
Apr 12 2008, 10:32 PM EDT I think that the people who prioritize money think that if they are going to have leisure time, they might as well go almost all out (spending more on higher quality things). People who prioritize leisure might not have the same thoughts and would not want to delay gratification. Do you find this valuable? |
