There’s a battle going on right now. Currently this battle is in a stalemate. It’s the battle over what tax rates should be going forward and who, if anyone, should pay more. First a little background. The current Federal tax rates were cut for everyone who pays taxes in 2001 and 2003 by the Bush administration. In order to get them passed they needed to make them temporary to get around some arcane budget rules that I won’t get into here. So, they were all set to expire at the end of 2010.
There’s a lot of dust being thrown up about this topic. Congress has decided to not take any action on this matter until after the mid-term elections next month. This has only fueled the arguments about this topic in the op-ed world.
The arguments against extending the tax cuts, especially for the highest earners, have diverged into the comical. Here are some of the arguments being made:
- One study reported that making more than $75,000 per year doesn’t make you any happier. So, you probably won’t feel any pain paying more in taxes if you earn more than this amount.
- In a very uncharacteristic position , a NY Times economist has argued that some earners don’t deserve a tax cut because they won’t spend all the money and therefore they don’t need the money. Apparently, this high earning college professor disagrees since he can’t seem to get by on $250K per year.
- In another NY Times article, the author attempts to determine who is rich, presumably to once and for all make them pay their “fair” share.
As someone who has worked for a living over a number of years, this is offensive. I am not suggesting that the tax cuts should (or not) be extended; however, this notion that someone is less entitled to their own earnings based upon what they “deserve” or “need” is over the top.
Over the years I have taken a path that millions of others have taken: you work more, your skills improve, your productivity improves and therefore your earnings increase.
Earning more is not about need. It’s about advancing in your career, increasing your productivity and showing the value in your work. We live in a capitalist society, there are no limits.
If your productivity increases and you chose not to increase your earnings according to what the market values them at, then you are a fool.
A Real Life Example
About 5 years ago, I learned a new technical skill. At the company I worked for, standard compensation policies were used, meaning that advancement either comes through promotion or modest yearly pay increases. The new skill I learned had significant value in excess of what I could earn at where I was (a “market dislocation”). So, I jumped ship and earned 40% more.
Did I need to earn more? Did I deserve to earn more for the same work somewhere else? That’s beside the point. That move enabled me to create a better earnings track record that has helped me to advance my career.