Top marginal tax rate in US now ~65%

[Barnabas]

No one should pay more than one third of their income in taxes. More than 33% and the State is robbing you.

[Dauphin]

35% + 10% + 3.8% = >65%?
please elaborate for clueless european.

If it's similar to other tax systems, certain allowances are gradually eliminated when you reach a particular level of income.

For example, if there were an allowance of $5,000 that was eliminated at a rate of $1 per $2 of income over $300,000 then it would be eliminated entirely at an income of $310,000. In such a scenario, each $1 of additional income would also create $0.50 of income now subject to tax - the effective marginal rate is therefore increased above the headline rate. If the tax rate is 20% it increases to 30%, if it's 40% it increases to 60%, if it's 60% it increases to 90 % etc. Actual numbers may vary...

[Ben Kenobi]

It should have read "$4 trillion in DEBT added over ten years." But no one knows what the deficit will be in 10 years. Those are simply projections.

Actually we don't even have a budget. Haven't in the last 4 years. As a result, Obama's spent 6 Trillion already. So it would be more correct to say 6 trillion in another 4 years. See, this cluelessness is why you don't get why the US is in trouble. You're off on the deficit by a factor of 2.5x.

[Kidlicious]

If it's similar to other tax systems, certain allowances are gradually eliminated when you reach a particular level of income.

For example, if there were an allowance of $5,000 that was eliminated at a rate of $1 per $2 of income over $300,000 then it would be eliminated entirely at an income of $310,000. In such a scenario, each $1 of additional income would also create $0.50 of income now subject to tax - the effective marginal rate is therefore increased above the headline rate. If the tax rate is 20% it increases to 30%, if it's 40% it increases to 60%, if it's 60% it increases to 120% etc. Actual numbers may vary...

First gross income is adjusted. We call that agi. From agi deductions are made to taxable income. The marginal tax rate is applied to your taxable income, not to you gross income or agi. I don't know where KH is coming up with those numbers. They don't make sense.

There's been no change in adjustments, only to deductions. What I'm saying is that no one actually pays 35%, but without deductions someone could pay as much as 35%.

[Felch]

KH knows about stacking paper to the ceiling the same way that I know about getting high. From experience.

[Ben Kenobi]

Well just a month ago you were a poor teacher on $10k a year. Now you're apparently a business owner struggling under a heavy tax burden. This seems.. odd.

I've always owned my own business since I graduated. I haven't stopped taking clients...

[Dauphin]

First gross income is adjusted. We call that agi. From agi deductions are made to taxable income. The marginal tax rate is applied to your taxable income, not to you gross income or agi. I don't know where KH is coming up with those numbers. They don't make sense.

There's been no change in adjustments, only to deductions. What I'm saying is that no one actually pays 35%, but without deductions someone could pay as much as 35%.

OK, all you've actually told me is that you don't understand phaseouts.

[Kidlicious]

OK, all you've actually told me is that you don't understand phaseouts.

There's a phase out on the alternative minimum tax, but it's put in to discourage married people from filing seperate. So they file jointly. No one pays anything like 60% tax in the US.

[Dr Strangelove]

The numbers seem nice and low for you.

I pay 40% on earnings above £32k and 50% on anything I would earn above £150k (though that's dropping to 45% in april).
+ 12-14% national insurance
+ 20% sales tax on most things.
+ vast additional duties on fuel, booze etc.

Is there a ceiling on the income taxable for national insurance? In the US only the first $110,000 is taxable for social security and medicare.

[Krill]

http://en.wikipedia.org/wiki/National_Insurance

[Guynemer]

I would love to have the "problem" of being in the top tax bracket. I dream of being that punished.

[DinoDoc]

I would love to have the "problem" of being in the top tax bracket. I dream of being that punished.

You dream of only having 35% of your income for your own use?

[Guynemer]

Yes, if I had that much income in the first place.

Also, the person doing the punishing in question may or may not bear a striking resemblance to Christina Hendricks. I can neither confirm nor deny this.

[MichaeltheGreat]

There's a phase out on the alternative minimum tax, but it's put in to discourage married people from filing seperate. So they file jointly. No one pays anything like 60% tax in the US.

You still can if you're stupid. There's also phaseouts on the standard deduction and on the lower tiers of rates - that's where the 39.6% rate comes in and then goes out once the phaseout is complete.

[MichaeltheGreat]

You dream of only having 35% of your income for your own use?

If you can show me one live example of anyone in the US paying that. FICA caps out, and it's your problem if you choose to live in a city that has a local income tax. Worst case in the People's Republic of California is you can get to around 53% combined marginal tax rate, if you're making $1 million a year and a short form filer and have no capital gains and you don't do jack **** to defer income or reduce liability. Only 470k a year after tax? Lions and Tigers and Bears, oh my!