A Fascinating Exchange on Implicit Marginal Tax Rates

A commenter at Andrew Gelman’s blog writes:

I’m a recent college grad making 50K. It very much feels like I have the same expendable income as I did when I was making 18K.

But, even if that is true, which I often concede it might be, it is also true that I can’t get to 80K without going through here, which keeps me from returning to waiting tables.

This is a big part of the upward mobility story: where do you see yourself in a few years, and what will you do to get there? For people who see the deck of life stacked against them, it doesn’t make sense to make the choices, and the sacrifices, that come naturally to people who’ve been steeped in middle class norms since birth. 

I recommend reading Andrew’s post, which considers the question of why a worker might choose a higher-paying over a lower-paying job even if taxes and transfers meant that one would be left with the same amount of disposable income:

For any particular job, it’s typically less pleasant to work more, so if you can choose your hours, you have a choice between more money and more leisure. But most people can’t typically choose between a minimum-wage job and a $60,000 job. So the short answer to, Why don’t people quit their jobs and work at minimum wage?, is that their working conditions would be less pleasant.

Identity matters. There are many people who will, for example, trade income for autonomy. This is so common as to strike most of us as unremarkable. Yet the happiness that autonomy-lovers derive from autonomy can’t be taxed! It is, in a sense, a brilliant scam, and one that can give us a misleading sense of the importance of rising wage dispersion. 

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

Most Popular


The Gun-Control Debate Could Break America

Last night, the nation witnessed what looked a lot like an extended version of the famous “two minutes hate” from George Orwell’s novel 1984. During a CNN town hall on gun control, a furious crowd of Americans jeered at two conservatives, Marco Rubio and Dana Loesch, who stood in defense of the Second ... Read More
Film & TV

Why We Can’t Have Wakanda

SPOILERS AHEAD Black Panther is a really good movie that lives up to the hype in just about every way. Surely someone at Marvel Studios had an early doubt, reading the script and thinking: “Wait, we’re going to have hundreds of African warriors in brightly colored tribal garb, using ancient weapons, ... Read More
Law & the Courts

Obstruction Confusions

In his Lawfare critique of one of my several columns about the purported obstruction case against President Trump, Gabriel Schoenfeld loses me — as I suspect he will lose others — when he says of himself, “I do not think I am Trump-deranged.” Gabe graciously expresses fondness for me, and the feeling is ... Read More
Science & Tech

Set NASA Free

The Trump administration has proposed shifting the International Space Station from a NASA-exclusive research facility to a semi-public, semi-private one. Its plan would nix all government funding for the ISS by 2025 and award at least $150 million per year to NASA to help with the transition. This would be a ... Read More