I also appreciate discontinuities and while I won't comment on the data in the paper itself without cross-referencing, I will say that a couple of these examples hold true for me from applied observation over the years. When I was old enough to start caring about insurance for health and property, or became a parent and had to begin forecasting costs for college and what loans really represented, I began looking at observable data much differently. Working in the software industry, you begin to see the complicated systems at work at the C-Level, and the seemingly odd relationships with unrelated organizations start to become clear. Being an educated voter, a discerning consumer of products, and turning a critical eye on world news all require the ability to see processes, their patterns and the discontinuities within them. While there may not always be a useful explanation behind all of them, seeing them in the first place is essential to navigating so-called reality successfully.
The UK tax system also has a bunch of unfortunate cliffs, and tapers that create >60% marginal tax rates and worse. There's a calculator here that illustrates it well https://tax-cliffs.britishprogress.org/calculator
The childcare cliff edge is probably the worst, but the personal allowance taper isn't ideal either as it's compressed over a relatively short income range
And of course all the thresholds remain frozen, creating plenty of fiscal drag on top.
> The UK tax system also has a bunch of unfortunate cliffs, and tapers that create >60% marginal tax rates and worse.
Oh I don't doubt it. In my native country of Belgium the tax rate can go to 69% and more: 50% income tax (used to be as high as 52.5% and maybe even 55%, don't remember) and then, on top of that, an addition 19% social wellfare tax. That's not mentioning stuff like, if you manage to buy stocks with what you have left, 30% state tax (+ crazy bank fees) on any dividends you receive from those stocks.
And then the brand new (1st jan 2026) 10% tax on any capital gain, once again: in addition to all the already existing taxes.
Add some arbitrary decisions on top of that, where if you happen to maybe have bought/sell a bit too many stocks or if you happen to have managed to put a too big part of your wealth into stocks, they may consider you're a "professional investor" and then your capital gains are taxed at your income rate.
Some are going to say: "Oh but create a company, get back the VAT, do this/do that".
I don't want to basically become a fiscal lawyer just to not be assraped by ever more taxes.
Instead of trying to "optimize", I just voted --before they'll introduce an exit tax (I'm sure that's coming)-- with my feet, my money and the future wealth I was going to create and left the country.
For what was I getting in return? According to a flemish university an estimated 55 000+ undocumented illegal migrants are now living in the capital city of Belgium, Brussels, alone. That's 5% of the population of the city that are undocumented migrants. They don't live in proper conditions. They're a drag on the economy. They're not happy, they're not thriving. Locals aren't happy either.
I didn't vote for this.
To me once politicians go too far, that's what they deserve: the middle class living the city in drones and being replaced by poor people. As I tell of my friends and family who also left the city: I just went a bit further and left the country altogether.
Following the example of my friend and ex-neighbor who did so decades ago: he left for SoCal (btw I didn't go to the US) and created two startups. Second one was a big hit. Belgium (and the EU) saw exactly zero return of his incredible drive and talent.
Another recent statistics: 40% of the people of Brussels are living close to the poverty line.
But at least socialists got the utopia they dreamed of: they're sure to never lose an election again. The middle class is dying in Brussels. The poor won't vote against socialism.
I just packed and left and advice anyone who can flee a sinking ship to do so. Many countries in Europe have decided to commit suicide and to turn themselves into slums.
I think this is just the beginning for may EU cities/countries: there's much more pain ahead --and although AI is going to be used as a scapegoat-- this has absolutely nothing to do with AI and all to do with political decisions.
It pains to see how my native city has been dragged into poverty... But good riddance.
As for the next gen: from day one I raised my kid in english. At 11 y/o she's totally fluent and our thinking was simple: english is at least understood mostly everywhere in the world. She'll have to move because I fear it's not just my native city that is toast.
It is highly likely the 50k undocumented immigrants aren't "a drag on the economy" but "people increasing margins of business by being exploited in almost slave-like fashion, and doing the work you don't want your kids to do".
it depends what the purpose of grading is. if the people is to purely assess, grading question by question is better. if the purpose is to provide feedback, knowing how the student did in general can substantially help with identifying what to emphasize
[ EDIT: Since the undated article is actually from Feb 2020, predating the expansion of federal health insurance subsidies, I withdraw everything I said below. ]
----------------------------------
The opening story is fabricated and/or bullshit.
Last year (2025) there was no limit on income for health insurance subsidies. That ended for this year, but last year there would have been no reason for anyone who knew what they were doing to try to lose money to drop their income (especially in the cited range of $48-55k/year).
That is the case this year, in most states (thankfully not where I live), but that's not what TFA is talking about.
Suspicious? It certainly makes me skeptical that the author has got the details of the other examples correct.
> A simple fix for the problems mentioned above would be to have slow phase-outs instead of sharp thresholds.
How about the even simpler fix of not having phase-outs? This generally works: the cost of a subsidy generally does not increase as the recipient pays more taxes, so the higher total tax paid by a higher-income person will easily pay for the cost of a subsidy. And giving higher-income/wealthier people the same subsidies as poor people may help them appreciate the ways in which the subsidies are helpful and the ways in which they suck, which can help the whole system improve.
Indian laws have the same too. For taxation 'surcharge' applied to high income groups, a patchwork called "marginal relief" fixes it [1], however, leaves ranges in income where 100% of incremental income goes away in taxes.
Another place where thresholding is misplaced is minors (below the age of 18 years) being subject to different laws (this is for India at least), e.g., seriously different punishments for crimes like homicide or rape. I have heard that crime groups then purposefully involve minors, push the blames on them if caught, and effectively get away for much less.
> Another place where thresholding is misplaced is minors (below the age of 18 years) being subject to different laws (this is for India at least), e.g., seriously different punishments for crimes like homicide or rape. I have heard that crime groups then purposefully involve minors, push the blames on them if caught, and effectively get away for much less.
This also used to be common in the US, but nowadays for (violent?) crimes minors can be charged as adults, so this kind of thing is only done for drugs and organized stealing rather than murders and violent crimes.
Beautiful! I noticed this on the chess ratings distribution on Lichess: players like to cross a nice multiple of 100 and make an extra effort to avoid dropping below if they can: https://imgur.com/a/Db7fQdX
Jim Roskind had a really nice talk [https://www.youtube.com/watch?v=_uaaCiyJCFA] at AWS Reinvent 2022 which highlighted the fence post problem. Basically, AWS was targeting P50 and P90 latencies in many services, and sure enough there were big clumps of latencies right under those target fence posts as engineers were basically gaming the metrics and nerfing the >P90 latencies to make it happen.
One way to reduce income may be to buy a bunch of stocks with high variance - for any that is in the red during the year, sell and rebuy them. Any that has a gain, leave them be.
Gosh that Polish language scores graph is good. Clean bell curve, slight skew, classic little bump at 100 because the measure is truncated, and then this giant mess at 30 that looks more like something out of a heart rate monitor than a normal distribution.
The marathon one has a simple - and fun - explanation: it’s great to run with people!
Many (most?) marathons have pace runners who run the course, hewing to each 30 minute and 15 minute finish. So there’ll be a 3:30:00 pacer, a 3:45:00 pacer and so on. Your local pacer might even have their pace on their shirt and may even have a flag so they’re super hard to miss as you’re running.
One friend of mine runs with a speaker, to play music and keep everyone’s spirits up.
By the end of the race they’d acquired a small army of marathoners! You could see their smiles for miles, and when they all finished together they had a huge party in the recovery area with the speaker :)
I’m surprised the marathon time discontinuity isn’t bigger :)
I sincerely believe that a better idea in my opinion is to eliminate all means testing in government benefits altogether. No, higher taxes is not means testing. They are not the same thing at all. Removing means testing means we want the service to be used by all, which means the service should be at least usable by people who have the option to use something else. On a similar note, medicare clawback rules are cruel and unusual punishment. To punish the stupid and ill prepared while rewarding those who did tax planning five years or more before retirement is cruel.
There is a hilarious one in the Indian direct tax (Income tax) code right now:
If your (taxable) income is less than 7L (inr), no tax is assessed.
If your income is greater than 7L, but upto 12L, tax is assessed, but a tax _rebate_ (a discount on payable tax) is granted for the exact amount of tax owed. This means net tax paid till 12L is zero.
But if your income is 12L + 1, this rebate no longer applies, so the entire tax assessed (on the 7L+ income) is now due. This means that a person who earns 12L+1 INR makes ~70K inr less, post-tax, than the person who earns 12L INR.
After complaints, to correct this, they added another layer: If your taxable income is >12L but less than 12L+~70K (the tax thats due), then the maximum tax due is just the amount your income exceeds 12L bye. So you stagnate at the same post-tax salary from 12L to 12L+70K.
> someone who was desperately trying to lose money before the end of the year
Isn't donating to charity a lot easier than gambling on options? It's both legal and extremely easy to donate 5k to a tax-deductible charity of your choice...
> There are a number of ways someone could do this; one commonly suggested scheme was to buy put options that were expected to expire worthless, allowing the buyer to (probably) take a loss.
> That means if an individual buying ACA insurance was going to earn $55k, they'd be better off reducing their income by $6440 and getting under the $48,560 subsidy ceiling than they are earning $55k.
I am told by a CPA: In the US tax system, one is limited to deduct $3,000 of net capital loss against their otherwise taxable income. These put options would generate a capital loss. Therefore, this strategy would not accomplish the goal stated in the article.
30 comments
[ 3.0 ms ] story [ 44.1 ms ] threadThe childcare cliff edge is probably the worst, but the personal allowance taper isn't ideal either as it's compressed over a relatively short income range
And of course all the thresholds remain frozen, creating plenty of fiscal drag on top.
Passive income of any sort? Bribes from the lobbying groups? Absolutely not.
Oh I don't doubt it. In my native country of Belgium the tax rate can go to 69% and more: 50% income tax (used to be as high as 52.5% and maybe even 55%, don't remember) and then, on top of that, an addition 19% social wellfare tax. That's not mentioning stuff like, if you manage to buy stocks with what you have left, 30% state tax (+ crazy bank fees) on any dividends you receive from those stocks.
And then the brand new (1st jan 2026) 10% tax on any capital gain, once again: in addition to all the already existing taxes.
Add some arbitrary decisions on top of that, where if you happen to maybe have bought/sell a bit too many stocks or if you happen to have managed to put a too big part of your wealth into stocks, they may consider you're a "professional investor" and then your capital gains are taxed at your income rate.
Some are going to say: "Oh but create a company, get back the VAT, do this/do that".
I don't want to basically become a fiscal lawyer just to not be assraped by ever more taxes.
Instead of trying to "optimize", I just voted --before they'll introduce an exit tax (I'm sure that's coming)-- with my feet, my money and the future wealth I was going to create and left the country.
For what was I getting in return? According to a flemish university an estimated 55 000+ undocumented illegal migrants are now living in the capital city of Belgium, Brussels, alone. That's 5% of the population of the city that are undocumented migrants. They don't live in proper conditions. They're a drag on the economy. They're not happy, they're not thriving. Locals aren't happy either.
I didn't vote for this.
To me once politicians go too far, that's what they deserve: the middle class living the city in drones and being replaced by poor people. As I tell of my friends and family who also left the city: I just went a bit further and left the country altogether.
Following the example of my friend and ex-neighbor who did so decades ago: he left for SoCal (btw I didn't go to the US) and created two startups. Second one was a big hit. Belgium (and the EU) saw exactly zero return of his incredible drive and talent.
Another recent statistics: 40% of the people of Brussels are living close to the poverty line.
But at least socialists got the utopia they dreamed of: they're sure to never lose an election again. The middle class is dying in Brussels. The poor won't vote against socialism.
I just packed and left and advice anyone who can flee a sinking ship to do so. Many countries in Europe have decided to commit suicide and to turn themselves into slums.
I think this is just the beginning for may EU cities/countries: there's much more pain ahead --and although AI is going to be used as a scapegoat-- this has absolutely nothing to do with AI and all to do with political decisions.
It pains to see how my native city has been dragged into poverty... But good riddance.
As for the next gen: from day one I raised my kid in english. At 11 y/o she's totally fluent and our thinking was simple: english is at least understood mostly everywhere in the world. She'll have to move because I fear it's not just my native city that is toast.
https://taxfoundation.org/research/all/federal/earned-income...
----------------------------------
The opening story is fabricated and/or bullshit.
Last year (2025) there was no limit on income for health insurance subsidies. That ended for this year, but last year there would have been no reason for anyone who knew what they were doing to try to lose money to drop their income (especially in the cited range of $48-55k/year).
That is the case this year, in most states (thankfully not where I live), but that's not what TFA is talking about.
Suspicious? It certainly makes me skeptical that the author has got the details of the other examples correct.
How about the even simpler fix of not having phase-outs? This generally works: the cost of a subsidy generally does not increase as the recipient pays more taxes, so the higher total tax paid by a higher-income person will easily pay for the cost of a subsidy. And giving higher-income/wealthier people the same subsidies as poor people may help them appreciate the ways in which the subsidies are helpful and the ways in which they suck, which can help the whole system improve.
[1] https://cleartax.in/s/marginal-relief-surcharge
Another place where thresholding is misplaced is minors (below the age of 18 years) being subject to different laws (this is for India at least), e.g., seriously different punishments for crimes like homicide or rape. I have heard that crime groups then purposefully involve minors, push the blames on them if caught, and effectively get away for much less.
This also used to be common in the US, but nowadays for (violent?) crimes minors can be charged as adults, so this kind of thing is only done for drugs and organized stealing rather than murders and violent crimes.
One way to reduce income may be to buy a bunch of stocks with high variance - for any that is in the red during the year, sell and rebuy them. Any that has a gain, leave them be.
Many (most?) marathons have pace runners who run the course, hewing to each 30 minute and 15 minute finish. So there’ll be a 3:30:00 pacer, a 3:45:00 pacer and so on. Your local pacer might even have their pace on their shirt and may even have a flag so they’re super hard to miss as you’re running.
One friend of mine runs with a speaker, to play music and keep everyone’s spirits up.
By the end of the race they’d acquired a small army of marathoners! You could see their smiles for miles, and when they all finished together they had a huge party in the recovery area with the speaker :)
I’m surprised the marathon time discontinuity isn’t bigger :)
Extra taxes on the stupid should be illegal.
If your (taxable) income is less than 7L (inr), no tax is assessed. If your income is greater than 7L, but upto 12L, tax is assessed, but a tax _rebate_ (a discount on payable tax) is granted for the exact amount of tax owed. This means net tax paid till 12L is zero. But if your income is 12L + 1, this rebate no longer applies, so the entire tax assessed (on the 7L+ income) is now due. This means that a person who earns 12L+1 INR makes ~70K inr less, post-tax, than the person who earns 12L INR.
After complaints, to correct this, they added another layer: If your taxable income is >12L but less than 12L+~70K (the tax thats due), then the maximum tax due is just the amount your income exceeds 12L bye. So you stagnate at the same post-tax salary from 12L to 12L+70K.
Isn't donating to charity a lot easier than gambling on options? It's both legal and extremely easy to donate 5k to a tax-deductible charity of your choice...
> That means if an individual buying ACA insurance was going to earn $55k, they'd be better off reducing their income by $6440 and getting under the $48,560 subsidy ceiling than they are earning $55k.
I am told by a CPA: In the US tax system, one is limited to deduct $3,000 of net capital loss against their otherwise taxable income. These put options would generate a capital loss. Therefore, this strategy would not accomplish the goal stated in the article.