Many of our fellow citizens should be re-taught the concept of marginal tax rates:
The marginal tax rate is the rate on the last dollar of income earned. This is very different from the average tax rate, which is the total tax paid as a percentage of total income earned. In 2003, for example, the United States imposed a 35 percent tax on every dollar of taxable income above $155,975 earned by a married taxpayer filing separately. But that tax bracket applied only to earnings above that $155,975 threshold; income below that cutoff point would still be taxed at rates of 10 percent on the first $7,000, 15 percent on the next $14,400, and so on.In round numbers, if there's a marginal tax rate of 35% above $100K, the taxpayer would pay no more than 28% of that $100K or $28,000 (see table; in practice it would be less than $28K because there are three more tax brackets between 15% and the hypothetical 35%). On the first thousand above $100K, he'd pay 35%, or $350. His net tax bill if he made exactly $101K would be $28,350. Not $35,350 (35% x $101K).
It would be helpful if newspaper columnists and television reporters understood this.
Posted by Linkmeister at July 26, 2009 03:49 PM | TrackBackIt would be helpful if ANYONE understood this. I even have to think about it, and I used to do tax research for a Big Eight accounting firm.
Posted by: hedera at July 26, 2009 07:42 PMWhether they understand it or not, it would be helpful if they REPORTED it as they are doing stories on tax rates. Like it or not, this is part of the story and they leave it out consistently (and, I think, deliberately). As with so many reports, the news readers only put out what their editors give them. You'd think print reporters would be able to include all the facts, but they are journalists no more.
And no one can understand why newspapers are dying out and network news programs aren't drawing decent ratings. What ever happened to "who, what, where, when, why, and how"?
Posted by: Illanoy Gal at July 27, 2009 04:22 PMI'm getting a migraine....have to lay down....
Posted by: toxiclabrat at August 1, 2009 03:07 PM