Hacker News new | past | comments | ask | show | jobs | submit login

That's right. You hit different brackets but each only affects income over that brackets minimum. You just progressively pocket less the more you earn which is sort of diminishing the return on your investment in work hours.



Yes, so you cannot end up earning less because of the step. You always earn more, though the "more" is more and more taxed.

I would be glad to be in the highest, most taxed step.


I think an example will clarify what I mean:

Suppose you work a normal hour: you get 1 euro, but taxes eat 50%. you get 0.5 euro.

Now suppose you work an extra hour on Sunday. According to the collective labour agreement, you get 150% so you get 1.5 euro, but your current tax slot was filled and because of the extra hour you fall into a higher rate. The extra income is taxed at a higher rate of 68%. 1.5 * 0.32 = 0.48 < 0.50. So even though you got 150% you earned less.


It does not need to be so complicated, with extra money earned on a Sunday.

Suppose you earn 100€ per month.

Taxes can be flat (say, 10%), in which case no matter how much you earned so far you get 90€

Taxes can be progressive (say, 10% up to 300€, then 20%) and you earn

Jan 90€ (YTD 100€ before taxes)

Feb 90€ (YTD 200€ before taxes)

Mar 90€ (YTD 300€ before taxes <-- this is the top of the 1st level)

Then in April you get 100€ before taxes, which means 400€ YTD. The first 300€ were at 10%, this April 100€ is at 20%. So you get only 80€.

There can be different ways to calculate this, this is just the general idea.

The important point is that you still get more money than you had before. It is not possible to loose money (= have the value decrease) just because you changed the level.

You just get less and less money per month (in steps) as you progress during the year.

I would be delighted to be in the highest step, it means I earn a lot of money.

Finally, the only (extreme) problem would be if you were taxed 100% starting from some amount of accumulated money. It would mean that from that point on you work for free.




Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact

Search: