
FET #10: What's your EMTR?
A broad-ranging chat about what makes a country "rich", how to understand your effective marginal tax rate (EMTR), and clarifying why capital gains are just income labelled differently.
We first chat about recent observations from our travels of what you notice about “rich” countries (whatever you interpret that to mean).
Then, we tackle one of my pet topic of Effective Marginal Tax Rates (EMTRs)—that is the combined effect of both taxes and losing welfare from earning an additional dollar (due to “means testing”). David Sligar’s recent article on the topic caught our eye.
I help clarify my argument that capital gains are just incomes with a different label, with nothing unique about them in economic terms compared to wages or other income. We can transform one into the other with accounting tricks. This was the topic of a recent substack post.
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Theme music: Happy Swing by Serge Quadrado Music under Creative Commons Licence CC BY-NC 4.0
Please leave a comment with your ideas for future podcast conversations and Substack posts.
FET #10: What's your EMTR?
I spent about 5 years gradually reducing my working hours to try to earn $99,999 and thereby qualify for FTB. I was making more money and got a day off every fortnight, at the cost of some stressful calculations. If you go $1 over the threshold you have to pay back around $4-5000 so you'd better get it right!
Incentivising moderately high earning people to earn less doesn't seem like an efficient outcome...