Monday, October 4, 2010

Disincentive to Produce

One of the problems we have in this country (in my opinion) is we have a disincentive to produce. At some point it makes no sense for a rational person to try to earn more because there is not enough return on their work. I know of people who were on welfare and it was hard to make the choice to work because their standard of living went down once they weren't receiving all the freebies. They made the choice to do it because they believed at some point they'd be earning enough that they would be better off, but for now it would be a step back. Someone else running into this due to the AMT wrote about their Disincentive to Produce. They were going to be losing so much of any additional money they earned, it didn't make sense to work harder or be more productive. Just seems like there is a problem when we don't reward people working harder. They make the comparison of a hourly worker who when working overtime gets time and a half, but the tax system tends to reverse things, that you earn less for your 60th hour worked than you did for your first hour worked.

Interesting thought.