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To: ksen

Here’s the math behind that depressing calculation. Today’s top federal income tax rate is 35%. Almost all Democrats in Washington want to repeal the Bush tax cuts on those who make more than $250,000 and phase out certain deductions, so the effective income tax rate would rise to about 41.5%. The 3% millionaire surtax raises that rate to 44.5%.

But payroll taxes, which are income taxes on wages and salaries, must also be included in the equation. So we have to add about 2.5 percentage points for the payroll tax .... employers are responsible for collecting this tax, it is ultimately borne by the employee. That brings the tax rate to 47%

http://online.wsj.com/article/SB10001424052702304066504576343611464445594.html


24 posted on 02/25/2013 5:50:03 PM PST by sgtyork (The secret of happiness is freedom, and the secret of freedom, courage. Thucydides)
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To: sgtyork
Here’s the math behind that depressing calculation. Today’s top federal income tax rate is 35%. Almost all Democrats in Washington want to repeal the Bush tax cuts on those who make more than $250,000 and phase out certain deductions, so the effective income tax rate would rise to about 41.5%. The 3% millionaire surtax raises that rate to 44.5%.

Do you understand the concept of marginal tax rates? I'm not trying to be snarky this is a real question because from your statement above it appears you don't.

But payroll taxes, which are income taxes on wages and salaries, must also be included in the equation. So we have to add about 2.5 percentage points for the payroll tax .... employers are responsible for collecting this tax, it is ultimately borne by the employee. That brings the tax rate to 47%

By payroll taxes I'm assuming you mean social security and medicare? The 6.2% for social security only applies to the first $113,700, or so, of wages. The 1.45% for medicare doesn't have a wage base limit so this one would apply to all wage income.

This still brings us nowhere near someone having to pay over 50% of their income, as originally argued upthread, in taxes.

Then you have to take into consideration the capital gains tax which is well below the top marginal rate. The top earners also earn much of their income from capital gains so you have take this into account and that would also put downward pressure on the amount of yearly income having to be paid out in taxes.

All this goes to show is that while "I have to struggle to keep half my income!!!!11!1 :doom:" makes a good soundbite it's nowhere close to being true.

I will donate $10 to Free Republic if you can show me one person that pays more than 50% of his income in taxes. Real evidence mind you not just some anecdotal comments.

Your WSJ article is pretty outdated and the tax increase he used to make his calculations haven't materialized.

26 posted on 02/26/2013 6:38:58 AM PST by ksen
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