Second Presidential Debate

[AGDee]

Originally Posted by Munchkin03

No, not really. I see far more than 20% of my paycheck deducted each month, and I don't make 250K. If you do make that much, it's more like 33%...so, that ends up being about $13K a month. For 6 people (4 kids!), that's not that much. Also, don't forget:

-insurance premiums/deductions
-pre-tax deductions for retirement
-state/local taxes
-Social Security
-any other pre-tax deductions (for example, I get one for public transportation)

Also, you have to factor in regional costs of living. What's "comfortable" in Michigan is "middle class" in NYC/SF, and "honking wealthy" in Mississippi.

You are correct that they have to subtract state/local taxes, Social Security and Medicare deductions, but we all pay those at the same rate and you don't pay Social Security or Medicare deductions after you've earned (I think this is the right number) $90,000K in one year.

When you figure your real income tax rate, you have to look at what you paid for the whole year per your tax return, after deducting your mortgage interest, charitable deductions, health care deductions, etc. Also, our tax rate is graduated. When people say "I'm in the 33% tax bracket", they aren't paying 33% on all their income. They're paying 10 % on the first 11,500, 15% on the next 20,000 or so, etc. They are only paying 33% on the amount above (again, shooting from memory here and could be wrong on exact figures) $125,000. So the average of all these different rates ends up being much lower 33%. I do understand that the cost of living in NYC and California is significantly higher than other places. Some of those costs do end up being deductions too, which should help balance it out (mortgage interest, for one)

But just about anywhere in this country, $250K is a pretty high income.

[Munchkin03]

Originally Posted by AGDee

You are correct that they have to subtract state/local taxes, Social Security and Medicare deductions, but we all pay those at the same rate and you don't pay Social Security or Medicare deductions after you've earned (I think this is the right number) $90,000K in one year.

When you figure your real income tax rate, you have to look at what you paid for the whole year per your tax return, after deducting your mortgage interest, charitable deductions, health care deductions, etc. Also, our tax rate is graduated. When people say "I'm in the 33% tax bracket", they aren't paying 33% on all their income. They're paying 10 % on the first 11,500, 15% on the next 20,000 or so, etc. They are only paying 33% on the amount above (again, shooting from memory here and could be wrong on exact figures) $125,000. So the average of all these different rates ends up being much lower 33%. I do understand that the cost of living in NYC and California is significantly higher than other places. Some of those costs do end up being deductions too, which should help balance it out (mortgage interest, for one)

But just about anywhere in this country, $250K is a pretty high income.

My whole point was that money goes much faster than you'd think, especially once you start making a considerable amount and a lot goes away in taxes and other deductions.

I also know how tax brackets work. Since I'm actually AT work now, I shouldn't get into the whole thing, lest I want to keep this job. I was simply responding to an uninformed, simplistic view of income deductions.