Marginal Tax Rates, explained

VenkmanVenkman BabyGroot
I stole this from someone, but it's a good explanation:

Let's say marginal tax rates are as follows:

$0-$5: 0%
$6-$8: 25%
$9+: 100%

Let's say you earn $10 a year. Your tax burden would break down as follows:

Dollars 0-5: No tax burden. Dollars in this bracket are untaxed.
Dollars 6-8: Three dollars are within this bracket (dollars 6, 7, and 8), and each of those 3 dollars are taxed at 25%. Total tax burden for this bracket: $0.75.
Dollars 9-10. Two dollars are within this bracket (dollars 9 and 10) and each of those dollars is taxed at 100%. Total tax burden for this bracket: $2.

Total Tax Burden: $2.75.

Or as the economists say, marginal tax rates are the tax rates paid ON THE LAST DOLLAR OF INCOME EARNED.

If you have a marginal tax rate of 100%, that DOES NOT mean you pay all of your income in taxes.

So, those people screaming "Da Dems want you to pay 70% of your income in taxes!!" are either lying, or are clueless as to how tax brackets and marginal rates work. Decide for yourself which it is.

Comments

  • Who doesn't know this kind of stuff?
  • What about the "intentionally misleading ignorant people" option?
  • Though, if the highest bracket is something like 250k, people pulling in 20 million will be paying damn near 70 percent, or whatever is at the top of the bracket.
  • VenkmanVenkman BabyGroot
    panchuker wrote: »
    Though, if the highest bracket is something like 250k, people pulling in 20 million will be paying damn near 70 percent, or whatever is at the top of the bracket.

    any of the proposals I've seen for a 70% rate set the highest bracket WELL above 250k
  • BigMex73BigMex73 BabyGroot
    One day when I make that magical deal, I will make millions of dollars with my get rich quick plan; and when I do .. I want to keep my tax rate on my $10,000,001 the same as my $1. Until then Ill be on disability and SS and hopefully I get my tax refund so I can pay for my low income housing on my subsidized student loan which i traveled to on a federally subsidized mass transit system to a state subsidized public college. Some day Ill drive a car on State and Federal roads to my Federal mortgage backed home loan, but until then the Dems wanna redistribute the wealth.
Sign In or Register to comment.