Tax rebates: A clue to co-workers' salaries
Pay is a taboo subject in most offices, but listen closely to the watercooler chat and you might just might be able to figure out how much your colleagues make.
(Fortune) -- This week, a few days ahead of schedule, tax rebates from the Treasury Department will start arriving in Americans' bank accounts. About 130 million U.S. households -- including anybody and everybody who earned more than $3,000 in 2007 and filed a tax return by April 15 -- will get something back from Uncle Sam.
The purpose of this bonanza is, of course, to stimulate the sluggish economy by putting some extra spending money in people's pockets. But for the attentive (or, snoopy), it's also a chance to figure out roughly what co-workers make -- that is, if they happen to reveal the amount of their rebate, and you also know their personal situation (for instance, married with two teenaged kids, or single with no children).
As the water cooler buzzes with people talking about their rebates this week, and how they plan to spend them, colleagues may let slip details that can help you do the calculations. Are they blowing the whole thing on an evening of dinner and dancing? Or taking the kids to Disney World?
Or, maybe they didn't get much of a rebate at all, because they're just too darn highly compensated? In that case, keep in mind that individual filers with no dependent children who earned more than $75,000 last year begin to see a "phase-out reduction" (a reduction of 5% of every dollar earned above $75,000) in their rebates. For married couples filing jointly, the phase-outs start at $150,000; at $165,000 in household income (with no dependent children), poof, the rebate all but disappears. Uncle Sam evidently figures that people in those income brackets can well afford to provide a bit of economic stimulus without any undue help from Washington.
What if you somehow get wind of the fact that the office receptionist and your department manager each got roughly the same rebate? Seems odd, but it's the phase-out reduction in action again. The size of the rebates varies widely depending on taxpayers' income, marital status, and number of dependent children. The $12,000-a-year receptionist, single with no kids, may get a rebate of $325, while the $80,000-a-year manager, also single with no kids, gets hit with the phase-out and ends up with a rebate of just $350.
In a sense, these checks are an equalizer. Co-workers with little else in common economically may find themselves spending their windfalls on the same stuff.
That's because the rebate plan is weighted in favor of struggling middle-class families, with wealthier families getting proportionally more modest checks. Let's say your big boss and her husband have two dependent children and earned $160,000 between them in 2007. With the $600 child credit and minus a $500 phase-out reduction, they'll get a rebate of $1,300. That's substantially less than the $1,670 than a couple earning just $35,000 a year, with two kids, has coming - even though the boss's household income is more than five times higher.
It isn't often that a factory worker gets a bigger check than a fat cat. This is one of those times. Who knows, moaning about how hard you got whacked by the phase-out reduction could become a new status symbol.
The formulae for figuring out roughly who gets what rebate are available to the public, of course, on the IRS web site (see www.irs.gov/irs/article/0,,id=177937,00.html). And since the subject of who makes what is kept strictly under wraps in most offices, this could provide some useful insight into how you rank on the payscales.
Also bear in mind, of course, that if someone is pressing you for details about how you'll spend your rebate, he or she may have an ulterior motive for asking. Not that it's anyone else's business, but when did that ever stop anybody from wondering?
Is pay a big secret where you work? Should it be? Is there anyone whose pay you're curious about -- or who you suspect is curious about yours? Have you ever tried to figure out a co-worker's salary? Post your thoughts on the Ask Annie blog.