This was written a few years ago, but is more a discussion of the “I don’t want to make more money, so I can pay less tax” argument that I keep hearing. If you make more, your income is not completely taxed in the new bracket, only the money in that bracket.
A discussion arose about whether as a “rich Ontarian” would you work 20% less to avoid the new “tax on the rich” that was proposed on the Liberals in their ill-fated budget last week ? Jon Chevreau’s tweet seems to have started the discussion:
I think if I was close enough to the $150K “filthy, stinking rich bastard” line (as delineated by the Liberals budget) I wouldn’t worry about it too much, although I find it interesting that Jon’s tweet stated: "If I were a high-income Ontario citizen making much more than $150K/year...", what do you mean IF brother? JC, you are not fooling anyone!
Getting back to the discussion at hand, if I decided this was the strategy I’d want to take to “stick it to the tax man” and stay in a lower (provincial) tax bracket how would I do it?
The obvious choice is to simply take every Monday or Friday off and thus make every weekend a long(er) weekend, however, would my employer respect my 4 day work week? My suspicion is no, they would simply expect 5 days of work out of my 4 day work week (at least if I worked in the Private Sector).
I would prefer to take the extra 50-ish days vacation (thus another 10 weeks of vacation), because then you can take entire months off. I have found that when you take an entire month off, no one expects you to do any work during that time period. You can then take another month off, along with all your regular vacation!
Do I think this is a good idea? Taking off time to lower your income, so you pay less tax? I think I’d try to make more, so the tax didn’t hurt that much, but that is only my opinion. Many firms do allow for “income averaging” where you can take unpaid leave of absence, but have the loss of income averaged over the whole year, which would be the option I would choose (if I was to want to take off 20% more time).
What are your thoughts?
Typically people that make that kind of money will find it difficult to disconnect from their work 1 day a week anyway. They would take a pay-cut and just answer emails on their phones and take calls I’m sure. I would be impressed if someone making over $150K could actually do it.