Meta (slrpnk.net)

Having a progressive tax system means tax rate increases disproportionately with the more work you do. And that’s a good because working less is encouraged by a reduced avg tax rate.

But what happens when you take a year (or 5 years) off? You live off savings that were taxed in higher brackets while earning zero. IOW, consider:

• Bob works 6 years straight earning 50k/year.
• Alice works 3 years earning 100k/year then takes 3 years off.

They both had the same gross earnings per unit time but Alice gets screwed on taxes because of the progressive tax system. My pattern is comparable to Alice due to forced full-time gigs that refuse part-time. My refuge is to subject myself to being over-employed for a stretch then quitting for a stretch of bench time. The only remedies I see:

1. Take a 1-year contract starting in June. Do not work the first ½ of the 1st year, and do not work the second ½ of the 2nd year.
2. Form a corporation, work as independent and direct your own “false independent” 1-person company. Money builds in the company as you pay yourself the same amount whether you are working or not. (Some people put the company in Hong Kong because it accommodates this well and the company feeds the director gradually and persists well after retirement – or so I’m told)
3. Work in a country that adjusts for income fluxuations by giving you a tax credit if your income drops substantially from one year to the next.

I made up number 3. Does that exist anywhere?

Any other techniques to hack around forced full-time scenarios? Or to deliberately fluxuate working hard and not working without the tax penalty?