Should workers be taxed at a higher rate for overtime hours?

Question

If so, why.

Please defend the current system, or help us abolish it.

Pepsi Lime, you misrepresent the current system. Workers currently get taxed higher for overtime, even if they do not actually make more hours over the year. The assumption is if I work 42 hours this week, I am taxed as if I worked 42 for the whole year.

The current system actually leads to people working overtime (which their bosses can force them to do) and often making less than their current actual salary.

I agree (a little) about the 'fair tax', but I think you have not really thought through the current law as regards overtime.

It is massively unfair, and leads to yet further abuse of workers by their employers and the IRS.

bbcpa--what I propose is fairly radical, but would provide a real incentive to workers, and a strong incentive to employers not to abuse overtime.

I propose that additional hours be tax free. This way the IRS will pressure employees NOT to encourage overtime (which is a real problem with jobs like (police etc.)...

Yes, it's radical, but there is no way it would hurt the IRS. It would benefit the workers, and it would make employers more considerate in using up workers hours.

Answer 1

Depending on if their overtime puts them into a higher tax bracket or not, they might already be taxed at a higher rate.

The current system may not be perfect (far from it as a matter of fact), but it would be better than the so called "Fair Tax", which is anything but fair (being a national sales tax), as it would hit the poor and middle class far worse then it would hit the rich. The best solution to the tax situation is to get rid of loopholes and tax breaks for special interest groups, and make the tax code really fair, but keep it a progressive tax code (the more you earn, the higher your tax rate).

Answer 2

You don't pay a higher tax on overtime than you do on the same money made as straight time, it's all taxed the same.

It's possible that a higher percentage is deducted from a paycheck with a lot of overtime, but at the end of the year when you calculate your total tax for the year, if too much was deducted then you'll get the extra refunded to you.

Think about it - your tax on your tax return is figured based on your W-2 - and the W-2 doesn't show anything about what was overtime hours and what was straight time, just what your total income and deductions were.

Answer 3

I'm not sure that the premise you start with is correct. Yes, the withholding tables will generally take more out of OT, but only because you made more in that period, the lower brackets have already been used up with your regular check and your OT is possibly pushing you into the next bracket (for that period - but probably not for the year overall).

The brackets are the widest and generally the lowest that they have been in 25 years. You bash the current system (and there is plenty to bash) but you are not saying what you are advocating in the alternative.

Answer 4

AN AMERICAN, should not be burdened with an "income tax" on the earnings !!! This is one of the most abusive methods, politicians have ever come up with !!!@ Yes, I am well aware that this tax ( EXTORTION) came to be, as a result of financing WW I, AND THE REQUIRED 37 STATES DID NOT RATIFY THIS, PER THE CONSTITUTION !!!! After the vote in the Senate, to present this "act" to the public on which to vote for this constitutional amendment, a senator stood up and STATED, " WELL IT LOOKS AS IF WE NOW HAVE AN "INCOME TAX WITH WHICH WE CAN FINANCE THIS WAR " . !!!!!!
THE POLITICIANS ABUSED / TRAMPLED THE CONSTITUTION THEN, AND THE DAMNED POLITICIANS CONTINUE TO STOMP / TRAMPLE THAT CONSTITUTION AT THEIR BEHEST NOW !!!!!!
I realize that the military, and the "SQUABBLES BETWEEN THE STATES NEED TO BE SETTLED , PER THE CONSTITUTION !!!!!!!!!!! ALL THE REST OF THIS CRAP WILL NEVER STOP NOW THAT THE ABUSERS HAVE BRAIN WASHED THE POPULOUS !!!!
Uncle Wil

Answer 5

Absolutely not. Tax rates and Tax Revenue are not the same as is clearly pointed out in this article:

http://www.a2dvoices.com/realityCheck/commentary\budget.html

Increasing the tax rate is just discouraging the most efficient workers from working.