On Moonlighting
Last night I needed a towel to dry off my son after his shower. I found an old, faded towel. I remember that towel: it was a wedding present, twelve years ago, from a special person.
Many years ago, I used to work third shift at an apartment building as a front desk guard. I was there primarily to help the residents (who were very old) if they had a medical emergency. I would also make sure no one entered the building without permission. But mostly I did my homework. That was a great job for a student.
In the morning, (I worked all night and left about 9:00 A.M.), I would let in Bill the janitor. He was a great guy. He was older – maybe 55. He just did his work without complaining. He was unsupervised but he didn’t take advantage of that situation.
He was not paid well, (no one who worked there was), but he always showed up for his shift. One day it snowed two feet (this was Minneapolis) and he called in to say he couldn’t get in to work. I told him that he could take the bus to City Center, walk through City Center, and take the bus to work. It wasn’t convenient but I needed someone to come in. He did it.
I always wondered what bad thing he did to wind up being a janitor. He was obviously much more intelligent and capable than the typical janitor. Did he have a dark secret? It was hard for me to imagine that Bill would do something dishonest, but you never know.
Then one day he told me his story. He had actually had a nice career previously working for Control Data Corp. That large company fell on rather hard times, and laid off many people. It isn’t a good time to look for a new career at age 55. Bill was on unemployment for the maximum time and then he had to take a drastic cut in pay to work as a data entry person. He worked as a janitor on the weekend so that he could pay off his many bills.
Sometimes the market seems cruel to honest people like Bill, but maybe he should have saved more for a rainy day and planned for such a contingency. In any case, the market doesn’t guarantee everyone a job that pays above average wages – how could it?
The thing that seemed unnecessarily cruel in Bill’s case was all of the taxes he had to pay. We never think about it, but people who moonlight end up paying double taxes. We as a society would be perfectly happy with the taxes that Bill would pay on his first job (a full-time job) if he had chosen to work only one job. For some reason, the fact that he needed to work two jobs makes us feel that he needs to pay more taxes. And worse still, his marginal tax rate on that second income is even higher than the tax rate he paid on the first job.
Think about this: why would someone working a second job need to pay more taxes? Does he increase the burden of national defense? Does he require more freeways? Do his children (at that time, fully grown) need more public education? In what way would he be increasing his consumption of government services?
I think that politicians have overlooked the most obvious way to help the working poor. We should simply exclude from taxation income that is earned from a second job if someone:
1. Already pays taxes on a primary salary income (not independent contract income) that requires 32 or more hours per week.
2. The primary job represents at least 60 percent of the total income.
3. The second job is a different employer and is located in a different facility than the first job, (this is just to prevent people from claiming one job as two jobs).
Sure, this isn’t tax simplification, but adding an extra 20 minutes of your annual TurboTax time is preferable to paying taxes on a whole second income. And reducing the taxes on a second income is a great way to help the working poor, since many of them would otherwise never consider working a second job.
This proposal comes too late to help Bill; he retired years ago. But for people like Bill who work two jobs just to make ends meet, couldn’t we help them?
Getting back to the towel at the beginning of the story: Bill gave it. He wasn’t rich but he insisted on giving something. I always thought his towel was special because it represented a true sacrifice. Bill was (I hope still is) special.
Many years ago, I used to work third shift at an apartment building as a front desk guard. I was there primarily to help the residents (who were very old) if they had a medical emergency. I would also make sure no one entered the building without permission. But mostly I did my homework. That was a great job for a student.
In the morning, (I worked all night and left about 9:00 A.M.), I would let in Bill the janitor. He was a great guy. He was older – maybe 55. He just did his work without complaining. He was unsupervised but he didn’t take advantage of that situation.
He was not paid well, (no one who worked there was), but he always showed up for his shift. One day it snowed two feet (this was Minneapolis) and he called in to say he couldn’t get in to work. I told him that he could take the bus to City Center, walk through City Center, and take the bus to work. It wasn’t convenient but I needed someone to come in. He did it.
I always wondered what bad thing he did to wind up being a janitor. He was obviously much more intelligent and capable than the typical janitor. Did he have a dark secret? It was hard for me to imagine that Bill would do something dishonest, but you never know.
Then one day he told me his story. He had actually had a nice career previously working for Control Data Corp. That large company fell on rather hard times, and laid off many people. It isn’t a good time to look for a new career at age 55. Bill was on unemployment for the maximum time and then he had to take a drastic cut in pay to work as a data entry person. He worked as a janitor on the weekend so that he could pay off his many bills.
Sometimes the market seems cruel to honest people like Bill, but maybe he should have saved more for a rainy day and planned for such a contingency. In any case, the market doesn’t guarantee everyone a job that pays above average wages – how could it?
The thing that seemed unnecessarily cruel in Bill’s case was all of the taxes he had to pay. We never think about it, but people who moonlight end up paying double taxes. We as a society would be perfectly happy with the taxes that Bill would pay on his first job (a full-time job) if he had chosen to work only one job. For some reason, the fact that he needed to work two jobs makes us feel that he needs to pay more taxes. And worse still, his marginal tax rate on that second income is even higher than the tax rate he paid on the first job.
Think about this: why would someone working a second job need to pay more taxes? Does he increase the burden of national defense? Does he require more freeways? Do his children (at that time, fully grown) need more public education? In what way would he be increasing his consumption of government services?
I think that politicians have overlooked the most obvious way to help the working poor. We should simply exclude from taxation income that is earned from a second job if someone:
1. Already pays taxes on a primary salary income (not independent contract income) that requires 32 or more hours per week.
2. The primary job represents at least 60 percent of the total income.
3. The second job is a different employer and is located in a different facility than the first job, (this is just to prevent people from claiming one job as two jobs).
Sure, this isn’t tax simplification, but adding an extra 20 minutes of your annual TurboTax time is preferable to paying taxes on a whole second income. And reducing the taxes on a second income is a great way to help the working poor, since many of them would otherwise never consider working a second job.
This proposal comes too late to help Bill; he retired years ago. But for people like Bill who work two jobs just to make ends meet, couldn’t we help them?
Getting back to the towel at the beginning of the story: Bill gave it. He wasn’t rich but he insisted on giving something. I always thought his towel was special because it represented a true sacrifice. Bill was (I hope still is) special.
posted by Michael Higgins at
05:00
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6 Comments:
Nice post.
Sometimes I feel that tax systems are made complicated so that they can conveniently hide their inherent unfairness. I dont know the US tax system - but taxing for a second job (who would do a second job unless they desperately needed the money?) definitely seems cruel. Sadly, its a practice in other countries too - at least the couple of countries that I have worked in.
By
Anonymous, at 4:29 PM
I think people already work too many hours, so I don't think I support a government law subsidizing people to work more than their fair share of 40 hours.
By
Anonymous, at 5:32 PM
Half Sigma, Govt. subsidy is bad but govt. regulation is good. Everyone has his/her tastes it seems.
Mr Higgins, corporations will love your proposal. Some even device their pay system so that their employees qualify for welfare.
We should built better welfare systemd that will train people for changes in the job market. What nobody talks about is redoing the wefare system for the times. Rather it is either about killing it off or preserving it in its antique nature.
yum yum
By
Anonymous, at 7:56 PM
Hi Vikram, Surya, Half-Sigma, and Yum Yum
Vikram: Nice compliment but I'm not interested. You're too kind though
Surya: I'm not surprised that other countries have a similar tax system, it's easier, and my system might lead to uninitend consequences that I haven't yet imagined.
Half-Sigma: I'm not sure that I understand your point. How would Bill's second job, and working "more than his fair share" of hours hurt you? I can understand that you might not want to work more than 40 per week, but that's your choice, not Bill's.
If you think he really does add to the burden of government, and that might be, then he could pay some tax on the second income, but not the full amount.
Yum Yum: People in Bill's situation are thankfully somewhat rare (not rare enough) and I admire their determination to make it on their own. They are not asking for welfare. But if you are already paying your fair share of taxes on your first job, how does it hurt anywone if he chooses to work more hours in another job?
This would be a nice way to help the working poor that hurts no one and doesn't create bad incentives to work less and be on welfare.
By
Michael Higgins, at 8:21 AM
Uh...I'm missing something here. How do you get "double-taxed" for having multiple income sources?
Income tax is paid on, well, income. If I earn $40K, I am obligated to pay whatever the tax is on $40K, regardless of whether that income came from a single source or ten.
It may appear that you're getting taxed multiple times, but in the end, it all works out to the same lines on your return. And if your multiple remissions lead to overpayment, you get a refund.
If you could declare primary and secondary income sources, with the latter being taxed less, most sane people would try to arrange their formal jobs accordingly - e.g., split a $100K job into two jobs, a $55K "real" job and a $45K "moonlighting" job, with the former taxed fully and the latter at whatever lesser rate...
Clearly, this makes little sense. Income is income - and if income tax is to be applied fairly to all, the source of that income is irrelevant.
By
Anonymous, at 4:54 PM
From the taunting of the chubby child in the playground to cruel jibes at fat people in work and social settings, few could doubt there is widespread prejudice against the overweight. However, according to research reported in Evolution and Human Behavior some people suffer abuse because being too fat is mistaken by the brain for a sign of disease.
Researchers say the immune system can be triggered into action at the sight of obesity because it doesn't like the look of what it sees, and associates it with infection.See how: why slim people dislike the overweight
By
Pinkou, at 1:17 PM
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