I was at the casino playing poker the other night when there was a big giveaway of a 2017 Corvette.
After the drawing didn’t yield his name as the winner, one of the guys at the table rationalized it by saying, “Ah, I wouldn’t wanna have to pay the taxes on it anyway.” Yeah, it’s not like you could immediately sell the Vette, pay the taxes, and pocket tens of thousands in profit.
Then he added, “Besides, it would put me in a higher tax bracket and I’d have to pay more on everything.” Nope, that’s not how marginal tax brackets work. You only pay more taxes on the amount above the certain level that put you in that bracket, while everything below is taxed at its own rate.
I was going to explain this to the guy a la Adam Conover, but then he added one more thing that made me realize it was pointless: “That’s why I don’t play Powerball.” Right, it’s not the ridiculous odds of winning, it’s the problem of paying the taxes afterwards.