I have a hypothectical question here. If I am in the 33% margin tax bracket and on a particlular day I wanted to paint a room in my house. Becausse I have to work, it may be necessary to hire a outside painter. Now, if I am working and have to pay for a painter to come in to paint the room. Would this be considered a after tax economic gain or loss. Here is some hypothectical figures.
Would it be an economic loss or gain if my employer pays me $200 and I $120 in labor? Would it be a gain if my employer paid me $180 for the day and I paid the $140 in labor? Would it be a loss if my employer paid me $100 for the day and I paid the $100 in labor? Or would it be none of these and would be something else. Thanks!

You simply need to compare the after tax income of your wages versus the cost to you for the painter's labor. If you are in a 33% marginal tax bracket, then its beneficial for you to hire the painter rather than do it yourself as long as the cost of the painter is less than 2/3 your pay rate. In your first example, you earn $200, which means you keep 2/3 of that after tax, or $134, and then you pay the painter $120, netting you $14. The alternative of not going to work and not incurring the painter's cost nets you $0. So in this case you come out $14 ahead by going to work and hiring the painter. I think you can see that with the numbers you gave in the other two examples you'd be better off staying home and doing the painting yourself.

Ebaines' analysis is pretty thorough, though there ARE other considerations, like how well the paint job is done, can you deduct the cost of paying someone (possible if you have a home office), etc.

Scenario. Thanks. Can I deduct if the paint job is not good and have to pay someone else to come in and redo it? Can I deduct this as well?

Yes opn the re-do!