The Abolition of Taxation on Overtime Wages is Overdue

I can not write on this matter without including the preface that I am opposed to all taxation in general, and the income tax in particular. That the government, to say nothing of the centralized federal government has anything to do whatsoever in regards to the transactions and trades of private industry and private individuals is, in my judgement, abhorrent.

Yet the treatment of this should be reserved for another time. For now, I will not address the general deleterious effects and immoral practice of the taxation of income in general, leaving aside, for the sake of brevity and that the specific issue at hand might be dealt with in a more ratiocinatious manner, that the income tax as a whole is both morally evil and works contrariwise to the effects intended, I will focus only on the matter of fact that in addition to taxes being extracted from the citizen by the government from the wages earned during the 40 hour work week, taxes are also ex-appropriated on whatever income the individual may earn on hours worked over 40 hours.

The entire structure of our income tax system is faulty, and again I won't deal here with the benefits in regards to a flat (income) tax (in terms of an actual monetary amount paid as opposed to a percentage) relative to the yoke we are currently under. But that following that following the line of reason used by the lawgivers in using a progressive tax system, there should be not, or at the very least a reduced tax rate on wages earned on hours worked over 40 hours a week relative to the tax rate on the first 40 hours.


Let us begin with the assumption that one man, Peter, makes 30,000 a year, working 40 hours a week, no overtime, thats about $15 an hour. And another man, Paul, who makes 52k a year, 40 hours a week, no overtime, about $26 an hour. Under the current system the latter is taxed more heavily than the former, the logic being that Paul is more profitable than Peter, and can afford to pay more. But if Peter is ambitious, and sacrifices his weekends sometimes, and stays over late other times, and works an average of 20 hours overtime a week, he too will make about $52,000, and now they will both pay the same amount of tax, yet Peter has worked 1,000 more hours than Paul! He is not more profitable, because profit is not a matter of calculating gross proceeds, but calculating units of output per unit of input. To tax wages earned on overtime runs contrary to the logic used to establish the progressive tax system, that the tax system should be lenient to the poorer masses, and tax the rich more heavily. In this case, I doubt anyone will contend that 52k constitutes being rich, but the gist of the matter is the same, and the only conclusion that can be made is that those in power do not intend to actually help the poor by raising them out of poverty, or even to allow the poor to lift themselves out of poverty, but only to make the poor more comfortable in their misery, as if the legislature were demented doctor, having the cure to his patients disease, but electing not to cure him, instead tending to the patient with the aim of letting his passing from this life into the next be as painless as possible, all the while portraying himself to be ever so loving and caring, nay, for this analogy falls short, it is in fact the very drug which should ease the patient’s pain in dying that is actually causing him to perish.

If anyone in government would seek for the betterment of the poor, nay, of the entire population (and we shall reach this point below), he should, if not resort to abolishing the income tax, and if not resort to a flat tax, at the least resort to the abolition of taxation on overtime earnings. It is not only a matter of benefit to the poor in the direct sense of allowing them to keep all of what they make in overtime, for in taking a percentage, and a higher percentage at that, of the earning on overtime, the government not only takes the means of sustenance, debt alleviation, and ultimately the means of the realization of the American Dream, but also takes the incentive to work overtime, and inso doing snuffs out, to a great extent the Dream itself.

Again if we look at the income tax system as a whole, the same line of logic used therein should lead us to the conclusion that taxation of overtime wages should be abolished, thus labor resulting in X amount of earnings is taxed more leniently than the same amount would be taxed if it were earned through investment dividends or capital gains. The reason is clear in the language of our tax code, I refer here to the fact that revenue from dividends and capital gains are, in the tax code, classified as “unearned income”, the implication being that labor requires more exertion than wise investing, and thus justifies a higher rate of taxation, thus it follows that revenue earned through working more hours, more than 40 hours a week, should justify, nay, necessitate less taxation, but of course I argue for non at all.

The reason I say none at all instead of merely a lower rate on overtime earnings is that a man can get by on 40 hours, (as is implied by the setting up and periodical increases in the minimum wage laws) and that it is only in pursuit of bettering oneself and his family, in pursuit of the American Dream that a man will work more than 40 hours. Thus if a man can sustain himself on 40 hours a week, it should follow that the government will also be able to sustain itself on the revenue it expropriates from people on 40 hours of work a week and nothing more. And because the Government is, at least in a certain sense a non profit organization (perhaps only in the most idealistic cognition) It has no reason to seek more than what is required for its maintenance. For government, there is no reason to go the extra mile, or to take more than what is needed, we do not have a royal family who has a thirst for jewels and a hunger for fine palaces, Taxation on money earned for 40 hours a week should contend our rulers whom we elect.


Thus we reach the part in this treatment where we find an objection that this policy would result in a loss of revenue for the government, and that to implement such a plan would require severe cuts in all departments of government. In the first place, whether or not this would actually be the result is questionable. It has been observed that when taxes are cut, tax revenue remains constant, or either increases or decreases marginally. But setting this question aside for the mathematicians to hash out. I should refer the reader to the previous paragraph, if a man can survive on 40 hours of work, so should the government survive on taxes collect only on those 40 hours. I would also add that it is not the measure of a nations wealth how much the government has, but how much the nation, the people actually have, and if taxes are reduced on overtime, more people will be inclined to work overtime, to produce more stuff. This is not the Reganomics, trickle down theory, it isn’t an argument that more stuff will be bought, though this is true, A nation is not rich because it buys a lot of stuff, it buys a lot of stuff because it is rich, it is rich because it produces a lot of stuff. Concomitantly, if more is produced, the workers working overtime will have more money to spend, and buy the addition products that will be created, which may in and of itself create more jobs.

The most powerful argument against my proposal is that it is not good for man to work more than 40 hours a week, and that he should instead spend time with his family, and be involved in his community. But this is argument is also the most patronizing. It suggests that those who put fourth the argument know what is best for the rest. Who is able to say how an individual should spend his time except for the individual himself? Perhaps the amount of money earned on overtime would be used to invest or start a new business, in order that ultimately the individual might not have to physically work anymore in the future? Maybe it is for family, in order to send his child to a better school than what the government provides. It could be that if overtime were not taxed so heavily a man might work 64 hours a week and his wife able to quit her job to stay at home with the kids or volunteer at the school. It is outside the bounds of government and even beyond its ability to say how a person might best make use of his time. If however, one holds that he is so wise that he knows not only what is best for himself but also for his fellow man, and if he also holds that having 128 hours off in a week to do something other than work (since it is obvious he is unable to compel a man to act as he would wish during his time off such as work in the community as opposed to playing X-box) is the highest end, then there is no other argument that can be put fourth. It is to be hoped that however, that one might not meet both of these requisites and that my argument might yet persuade him. Yet even if not, this is not conceding the argument to those who think themselves to be benevolent and omniscient. On the contrary it is at this juncture where they and I would take up, and engage in a new debate all its own as to what the American Dream really means. They would say, so I presume, that the American dream consists in family togetherness and a close knit community, and men should only work so much as is necessary to facilitate life and those ends, whereas I argue this is not it at all, That If this were the case, our forefathers would have never left their ancestral homelands and their own kith and kin to come to America. No it was precisely to get away from those very men, in centuries past they were kings, who thought they were so wise as to dictate to our forefathers what was best for them. The American Dream is about self determinism, making decisions for oneself without the unwelcome meddling of third parties. To be free from unwanted interference, so that one might work for the best life for himself that he can attain. In short the American Dream is whatever one wants it to be, the key is that it is up to the individual to decide for himself, and that it can not be dictated by someone else.

Alas, upon further consideration, we find that, in regards to certain individuals with a resolute will, the tax on overtime wages might in contrast to the intent of those who would seek to see people work less, cause these individuals to work even more. Let us return to our first subject Peter, now supposing he is a resolute fellow and the goals he intends to reach in life require him net $45,000 a year, he will end up working more hours as a result of his overtime earnings being taxed than if they were left to him. One should be reminded that men are not elements, or chemical compounds that can be manipulated and molded by the legislature or the king the way that the scientist does his in his lab.



As a corollary, I would also add that not everyone is able to work overtime, some are in the position of holding both a full time job (40 hours) and a part time job, working 15-30 hours a week in addition. To be logically consistent, we should also argue that this individual should only be taxed on 40 hours of his labor a week, though it would be difficult how to determine which 40 hours it should be. Suppose that the 40 hour job pays 15 and the part time job pays 10, should the average be taken of the two and the money earned after 40 hours total be tax free? Or should it only apply to the part time job? My suggestion would be that the government take its taxes from the lowest paying job first, as much as it can up to 40 hours if the full time job pays less, and only if there is a remainder of hours remaining should taxes be taken from the higher paying job. But any concession whatsoever would be well received from those who in their quest for the American Dream exert themselves and go the extra mile for the sake of their families and for the sake of a better life here in the New World.