Mind blowing! We are so gone as a nation, we just had this proved to us with the recent election results.
Who is going to vote for a cut in pay?
Very eye opening…
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Is This Why Americans Have Lost The Drive To “Earn” More
In the recent past we noted the somewhat startling reality that “the single mom is better off earning gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045.” While mathematics is our tool – as opposed to the mathemagics of some of the more politically biased media who did not like our message – the painful reality in America is that: for increasingly more Americans it is now more lucrative – in the form of actual disposable income – to sit, do nothing, and collect various welfare entitlements, than to work. This is such an important topic that we felt it necessary to warrant a second look. The graphic below quite clearly, and very painfully, confirms that there is an earnings vacuum of around $40k in which US workers are perfectly ambivalent toward inputting more effort since it does not result in any additional incremental disposable income. With the ongoing ‘fiscal cliff’ battles over taxes and entitlements, this is a problematic finding, since – as a result – it is the US government that will have to keep funding indirectly this lost productivity and worker output (via wealth redistribution).
As we noted before (details below):
We realize that this is a painful topic in a country in which the issue of welfare benefits, and cutting (or not) the spending side of the fiscal cliff, have become the two most sensitive social topics. Alas, none of that changes the matrix of incentives for most Americans who find themselves in a comparable situation: either being on the left side of minimum US wage, and relying on benefits, or move to the right side at far greater personal investment of work, and energy, and… have the same disposable income at the end of the day.
Naturally, the topic of wealth redistribution is paramount one now that America is entering the terminal phase of its out of control spending, and whose response to hike taxes in a globalized, easily fungible world, will merely force more of the uber-wealthy to find offshore tax jurisdictions, avoid US taxation altogether, and thus result in even lower budget revenues for the US. It explains why the cluelessly incompetent but supposedly impartial Congressional Budget Office just released a key paper titled “Share of Returns Filed by Low- and Moderate-Income Workers, by Marginal Tax Rate, Under 2012 Law” which carries a chart of disposable income by net income comparable to the one above.
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Many more graphs and the original presentation are included at the original article post on zerohedge.com
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Click on the article title for a link to full original referenced article.
