Quote:
Originally Posted by Hondaracer
So I used to work with this old hippy landscaper who had a scenario I think where the tax bracket thing came into play. It really only hurts you if you make a lot of money but make a low wage, and you’re making that big annual income through working OT etc.
I can’t remember the exact figures but the guy was making like $25 an hour. But he worked so much (sometimes like 100 hour weeks Apperently) that he was touching 100k annually making $25 an hour. He said he finally started using an accountant and the accountant told him some of these pay cheques basically amount to making $6-7 an hour because he’s working soooo much at such a low wage, your time becomes increasingly less valuable
As opposed to someone working 40 hours a week who goes from making $35 an hour to $45 an hour, yes you will be getting taxed more, but you’re also going to be taking more money home regardless of the bracket
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This doesn't make sense, that's not how any of it works lol.
Your time doesn't get less valuable the more you work, regardless of wage.
If the guy earned $100,000k in a year, this year, he would have paid $25k in federal and provincial taxes, including CPP/EI. Divide that by the total hours and you have your net hourly rate for the year.
The only way your "hourly" fluctuates so much in a given period is if you worked SO much that you hit the maximum marginal tax rate, which is 53.50%, once you hit $220k annual. IF he worked a 2 week period in which he earned $8500 pretax ($220k annually), which would be 200+ hours in 2 weeks, then he would have earned $11.63, but he would have had a hell of a tax return. I'm not calling you a liar, but something in that story doesn't add up, and arguably "working a lot at a low wage is disadvantageous" is false, from a fiscal year perspective.