That is so low compared to the UK.
Your real tax rate: 40%
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Re: Your real tax rate: 40%
#12Someone enlighten me, how can the author talk about a marginal tax rate for the entirety of ones income? Isn't a marginal rate by definition the rate which applies to earnings above a specific benchmark (thereby providing no disincentive to cross it)?
The "marginal" think really does throw this off. The "marginal rate" means the amount you'll be taxed for the next dollar you earn.
So this tells us little about the rate that each person already paid for the amount below the margin, the "body" of earnings, if you will.
Actually, the more I think about it, the more I think that the idea of a flat marginal rate is a good thing: that means there's little disincentive to produce more. I would have thought that a flat marginal rate with a curved "body" rate would be darned near impossible to implement, but this makes it sound like that's been fairly successful.
Of course, the fact that the marginal rate is 40% is a very bad thing. The government should not make up a plurality of our spending.
Re: Your real tax rate: 40%
#13Anyone know why there's such a big dip for 30yrs at $50K?
Re: Your real tax rate: 40%
#14That is so low compared to the UK.
I'd be interested in a "true marginal tax rate" article relevant to the UK, if you know one.
Re: Your real tax rate: 40%
#15Canada is quite similar: In 2006, from $14k up to $88k the combined Federal+BC income taxes, payroll taxes, and sales tax credits worked out to a flat rate of 26% plus or minus $250. (Above $88k the rate goes up, but mostly due to a cap on the amount which can be "hidden" in retirement funds.) Graduated tax rates plus low-income tax credits equals a flat tax.
Really? Effective US tax rates are about a third higher than Canadian rates? I find that difficult to believe, but I'd be greatly amused if it was true.
Well we do pay double per capita what Canada pays for healthcare, so it wouldn't surprise me at all.
Re: Your real tax rate: 40%
#16Man, those percentages in the chart at the end are really whacky.
Someone making $75,000/year pays a higher % tax their entire life than someone making $200,000/year? Someone making $20,000/year (at 30) pays almost twice the % as someone making $50,000/year (at 30)?
That doesn't seem right.
Re: Your real tax rate: 40%
#17Anyone know why there's such a big dip for 30yrs at $50K?
I'm guessing they assume a 30-year old couple has purchased a house recently (large mortgage interest deduction), and has student loans still (student loan interest deduction up to 6K/year I think, which goes away after 80K or so. IANAA).
Between those two things, plus the general tax benefits of being married (and 50K not being that much for two people imho) give them a low tax rate.
Re: Your real tax rate: 40%
#18As a person who wants to pay as little tax as possible (until of course, they start spending the tax money in ways that I see fit, which don't include blowing things up), I have always been against the concept of a single national sales tax, or a flat tax. However, more and more I am realizing that the benefits of axing most of the IRS (wow, talk about administrative overhead) would actually effectively lower everyon…
wow, talk about administrative overhead) would actually effectively lower everyones tax burden by several percentage points.
??? Where is the savings? The IRS is a tiny fraction of US government spending.
Edit: IRS $12.15 billion in 2010, total federal expenditures $3.552 trillion. So it's 1/3 of 1% of the federal budget.
Re: Your real tax rate: 40%
#19Canada is quite similar: In 2006, from $14k up to $88k the combined Federal+BC income taxes, payroll taxes, and sales tax credits worked out to a flat rate of 26% plus or minus $250. (Above $88k the rate goes up, but mostly due to a cap on the amount which can be "hidden" in retirement funds.) Graduated tax rates plus low-income tax credits equals a flat tax.
Really? Effective US tax rates are about a third higher than Canadian rates? I find that difficult to believe, but I'd be greatly amused if it was true.
Well, it depends in part on what you include. The 26% I mentioned is for income taxes, payroll taxes, and (income-based) sales tax credits; but Canadians also have to pay a federal sales tax of 5% and provincial sales taxes (typically around 7-8%) on most purchases.
I believe the total tax burden ends up being fairly similar between the US and Canada -- while Canada spends far more (per capita) on social services and health care, the US spends a similarly larger amount on the military.
Re: Your real tax rate: 40%
#20Man, those percentages in the chart at the end are really whacky. Someone making $75,000/year pays a higher % tax their entire life than someone making $200,000/year? Someone making $20,000/year (at 30) pays almost twice the % as someone making $50,000/year (at 30)? That doesn't seem right.
SS is 12.4% and it stops at ~120k / year.