<p>Bay - No, taxes can be on optional things. For example, we pay taxes on real estate and on owning a car. So there can be taxes on things that are not an entitlement.</p>
<p>Bluebayou - You are saying the marginal rate is 50% plus 46% on the remaining 50%, or a total of 50+23= 73%. This is not SO different from 80%, and keep in mind different schools seem to calculate things slightly differently.</p>
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<p>Yes, but we only pay taxes on those optional things if we <em>own</em> them. How do you conclude that a person <em>owns</em> a college education?</p>
<p>Taxes can also depend on optional states, such as choosing to marry the person you live with or not, or choosing to be a head of household or not. Hence there term “marriage tax” when the total tax for two people depends on their legal status. You don’t <em>own</em> a marriage, either. But it still incurs a marginal tax.</p>
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<p>It’s very annoying that the value of my time doesn’t equal my salary, even before taxes 
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<p>Since your friend hasn’t been working for many years, she’s going to earn less money because she is essentially a newbie. After a few years, her income will grow with her experience. This is a difficult hump to get over, because no matter when she starts working again, the value of her time will seem much greater than what someone is initially willing to pay her.</p>
<p>“It’s very annoying that the value of my time doesn’t equal my salary, even before taxes”</p>
<p>Of course the value of your time doesn’t equal what you get paid, by definition. That’s why you work. The value of the 80th or 100th hour/week that you could work however is undoubtedly high to you. That’s why you don’t work a second job (or a third - at some point your leisure is more valuable than the salary from the next hour of working).</p>
<p>The question is not whether the reduction in FA is a tax, but whether it makes economic sense for the OP to get a job given the incidental loss in FA on top of conventional taxes. The incentives are pervese; there is no direct impact on FA for the salary paid to (usually) wives when children are at home, but there is a substantial loss if she earns a salary after the children leave home.</p>
<p>But the rules are the rules, and she is perfectly entitled to take those rules into account when making economic decisions.</p>
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<p>I don’t disagree with this, I only disagree about whether the result is in society’s best interest. I do not think it is. If I have a way to pay for something, then I do not have a need for others to pay for it. It would be nice if they did anyway, but it is a waste of FA dollars that could be used for others who have no alternative ways to pay.</p>
<p>But Bay, on another thread you said this:</p>
<p>“My 85-year-old fathers spends several days a week going to the doctor on your dime, thank you. (He has gap coverage through my mother’s former government employer!). And he has $1mill+ in the bank.”</p>
<p><a href=“http://talk.collegeconfidential.com/1063002552-post33.html[/url]”>http://talk.collegeconfidential.com/1063002552-post33.html</a></p>
<p>Isn’t that more or less the same thing? You are happy to preserve your inheritance, even though your father could afford medical care on his own.</p>
<p>I’m not saying your family makes a morally wrong choice here - the incentives are what they are. But you could easily see someone else saying, “Wouldn’t those health care dollars be better spent on poor children?”</p>
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<p>Absolutely, and that was my point, geomom! Lol, I was being sarcastic in that thread! I think its outrageous how our governement spends money on people who don’t need help, but I understand why it happens.</p>
<p>I also think it’s morally wrong to take a job that you don’t need especially in this economic time. Let it go toward someone who needs it most.</p>
<p>Lol, that’s my point, too, Bay. A marginal tax rate approaching 80% causes people that could work to have no reason to work, and we are all losing their potential contribution. So we set up this system for paying for college that has little transparency, backwards incentives, is regressive to boot, and then we expect people pay up because, … why?</p>
<p>As EMM1 said, the rules are the rules, but who makes the rules? Aren’t we the adults now? Who set up such a perverse system?</p>
<p>It needs to be fixed.</p>
<p>There seems to be a fixation on marginal tax rates in this decision. I know it is classic economic theory to look at marginal tax rates, but there are so many other financial considerations in the real world. </p>
<p>Such as 1)qualification for Social Security Benefits, 2)ability to obtain a pension or 401(k) savings, 3)the extra money available once the college bills are paid. </p>
<p>And if the “system” for getting grants/scholarships for college is that capricious, wouldn’t you want to opt out of it and do it on your own if you had that option?</p>
<p>It might be more helpful if people on this thread viewed colleges for what they really are, price discriminators intent on maximizing their total revenue from all sources. In non-economics speak that means they try to extract the maximum revenues they can by treating each applicant as a separate financial pool. There are papers in the economics literature showing that some of the California schools adjust tuition to take advantage of increases in federal and state aid so as to maximize their total take from students, the feds, and the state.</p>
<p>Financial aid is simply the college word for reducing the price that it charges person A relative to person B. They have a better gig than other price discriminators like airlines and movie theaters because they get you tax return. </p>
<p>To say that it is immoral not to pay the lowest possible amount to an institution that is trying to maximize its revenues at your expense is not, in my view, particularly sensible.</p>