We need to take a moment to discuss your gross income versus your net income. In case you don’t know, your “gross” income is the full amount of a source of income (like your paycheck) before taxes or any other deductions are taken out. After they take the taxes and deductions out of your source of income, you receive what remains and this is referred to as “net” income. As an example. If your hourly wage is $10 per hour and you work 40 hours during the week, your gross pay is $400. But when you receive your paycheck, you notice that it is only $350. That is because they have taken out all of the taxes. The gross pay was $400, the net pay was $350. Pretty straightforward, right?
Okay, so this is where a lot of programs leave this information. There is money that is “taken out” of your paycheck and you should know the difference between “gross” and “net.” But there’s some important information that is being left out, and in my efforts to eliminate our tendency to DISCOUNT the value of anything, we need to look at this just a little bit longer and perhaps from a slightly different perspective.
First, it is very important that when we look at our hourly wage or salary that we give it the total value. For instance, in the example above, you earned the full $400 and we want to recognize the full amount. But what happens is we tend to focus only on the net income because that is what you are going to use to pay your bills. There is a tendency to think of the money we didn’t receive as being “taken out” – which is only part of what happens. That money is taken out, but it is used to pay for something. That is to say that you are actually spending that money. You are spending that money on a lot of things. Some of it goes to pay for roads, police, military, libraries, schools. Maybe some of it goes to pay for your health insurance or a retirement account. Maybe some of it goes to child support. Wherever this money goes, it is you that is spending it and we want to recognize that it is our money that is leaving our possession.
The point of this discussion is not to argue whether your tax money is being spent well, or what is fair or right, or who is to blame for anything. The point is to illustrate that the money between “gross” and “net” is money that is spent on goods and services. It is money that you earned and we do not want to DISCOUNT the value of those resources by not acknowledging them. So, yes, the money is “taken out” but then it is paid to someone else. It is not something that is happening to you, it is a process in which you are actively participating.
MEANINGFUL CONSUMERISM 