What Do You Make?


Dan Ariely thinks the complexity of the tax system makes Americans feel richer than they are because "we all know the gross amount that we make a year, but it’s not as clear what our net income is." Will Wilkinson agrees:

People really are often surprised by the size of their tax bill or their return. I think this problem is especially acute if you have a regular gig and a regular paycheck from which various taxes are automatically withheld, but also a freelance side gig and periodic paychecks from which various taxes are not automatically withheld. At one level, you know full well that taxes eventually must be paid on freelance income. Yet the regular gig with automatic withholding trains you to think of your bank balance as what you have left over after taxes have been taken. If you're a bit dotty and/or you find money matters a stressful and exhausting hassle to be avoided unless absolutely necessary, it's very easy to forget that your checking-account balance is a lie and that you are but the temporary steward of a good chunk of "your" money, which really belongs to the state.

Chart on the number of pages in the tax code via Peter Suderman.