The Soapbox

BocaHoo91

Joined: 06/03/2005 Posts: 31238
Likes: 52877


I'd be shocked if your effective tax rate is anywhere near 50%.


The top tax rate is 37%, but that doesn't kick in until $648K of taxable income (so after all of your deductions and pre-tax 401K contributions, etc). Everything below that gets taxed at a lower rate.

So let's say you have taxable income $1 million per year just for illustrative purposes. I'm assuming you're married filing jointly. On your first $648K of income, you'd owe $174K in federal taxes. On your next $352K, you'd owe 37% federal income tax or $130K. So you're at $304K federal against $1M of taxable income or a 30.4% federal tax rate. You'd pay 6.2% of social security taxes on the first $160K of income ($9.9K), you'd pay 1.45% medicare tax on the full million ($14.5K) and a 0.9% ACA tax on income over $250K ($2.2K). If you're in Virginia, you'd pay a 4-5% effective state tax rate (let's just call it $50K). So now you're at $304K+9.9K+14.5K+2.2K+50K = ~$381K against $1m of taxable income or a 38% effective rate. And that's against TAXABLE income. Your gross income before deductions is higher than $1M making your true effective tax rate even lower. But, let's just stick with your effective tax rate based on taxable income. In order to get to a 50% tax rate by adding sales tax and other additional taxes, you'd need to account for another $119K of other taxes. As egregious as phone bill taxes may be, I don't think it's adding a meaningful amount towards your effective tax rate.

And ALL of this assumes $1M of income which would put you in the top 0.6-0.7% of all households. If your income is less, your effective tax rate is going to be less. If you have any investment income, your effective tax rate is going to be less, because the max LTCG and dividend tax rate is 23.8%.

I can buy a MARGINAL tax rate of 50% for someone in the top bracket in a high tax state, but not a 50% effective tax rate. Not even close


(In response to this post by HoodatB)

Posted: 01/18/2023 at 10:49PM



+1

Insert a Link

Enter the title of the link here:


Enter the full web address of the link here -- include the "http://" part:


Current Thread:
 
  
Taxes are too high in this country for many -- HoodatB 01/18/2023 4:49PM
  The Taxed Enough Already Party welcomes you. -- Hoodafan 01/18/2023 5:22PM
  Where do you cut? -- BocaHoo91 01/18/2023 11:00PM
  You misspelled Kick the Can Down the Road Party ** -- TomGlansAski 01/18/2023 5:23PM
  Yes. But you want the right to focus on this more? -- ryno hoo 01/18/2023 5:00PM
  You mean marginal, right? -- Shenhoo 01/18/2023 4:52PM

Notice: Trying to get property 'queue' of non-object in /data/www/sportswar.com/wp-includes/script-loader.php on line 2781

Warning: Invalid argument supplied for foreach() in /data/www/sportswar.com/wp-includes/script-loader.php on line 2781
vm307