who may not realize how high their income tax brackets are when calculated as tax exclusive
An income tax can't be calculated "tax exclusive".
Sure it can, you can calculate on the basis of whats left from government claiming its cut. Very easy formula to convert betweent the two systems.
Te= Ti/ (1 - Ti)
Where Te= Tax exclusive rate and Ti= Tax inclusive rate.
For example, the a 17% (tax-inclusive) flat tax has a tax-exclusive rate of 20.48%.
(0.1700 / (1.0000 - 0.1700) = 0.2048)
For the NRST as proposed by HR 25, the 23% inclusive rate comes out to 29.87%.
(0.2300 / (1.0000 - 0.2300) = 0.2987)
| Inclusive Rate | Description | Exclusive Rate |
|---|---|---|
| 4.76% | Sample State Sales Tax --> | 5.00% |
| 10.00% | <-- Penalty for IRA/401k Early Withdrawal | 11.11% |
| 15.00% | <-- Marginal Income Tax | 17.65% |
| 15.00% | <-- NRST (not including SS/Medicare) | 17.65% |
| 15.30% | <-- Social Security/Medicare Payroll Tax | 18.06% |
| 17.00% | <-- Flat Tax (not including SS/Medicare) | 20.48% |
| 20.00% | <-- Capital Gains Tax | 25.00% |
| 23.00% | <-- NRST (including SS/Medicare) | 29.87% |
| 28.00% | <-- Marginal Income Tax | 38.89% |
| 32.30% | <-- Flat Tax (including SS/Medicare) | 47.71% |
| 39.00% | <-- Marginal Income Tax | 63.93% |
| 54.30% | <-- Max Margin Income/Payroll tax rate | 118.81% |
Note that any tax-inclusive rate larger than 50% would have a tax-exclusive rate of over 100%. And you figure that tax-exclusive measures are a good basis for judging the actual effect of tax burdens relative to your resources to pay them? Pitiful.
No you can't. What you've already paid can't be a percentage of what you have left...unless you're using the fairtax math. Is that anything like the Million Man March math?
The tax isn't imposed "on the basis of whats left from government claiming its cut"...how can it?
Income tax has to be paid as a percentage FROM your income. It's not paid as a percentage in addition to your income...
A sales tax is in addition to the price (tax exclusive)
It's an "income tax" not a what's left over from your income after they take the tax tax...
Get it?