For giggles I have to ask?

Question

I come from a upper middle class family & guess in some ways it seems as such I have to ask why do people making over $100,000 a year complaint so much. According to the tax code it seems anyone making from $30,651 to $74,200 pays 25%, anyone making $74,201 to $154,800 pays 28% tax on income, anyone making from $154,801 to $336,550 pays 33%, & anyone making over $336,551 pays 35% income tax yet people like me making around $30,300 pay 15% but if I get a raise of even a little bit my tax jump would almost double yet the tax different between the three highest levels changes about the same as my just jumped.

I'm all for people pulling their own weight & paying taxes but explain how the three lowest tax brackets change 15% a jump of 5% from the lowest to the next level & then a 10% jump to the middle. Someone making $40,000 pays about $10,000 in taxes leaving them only $30k while someone make 3x more at $100k paying 35% still has $65,000 left to live on for making 3 times as much.

Answer 1

As far as the tax brackets jumping, you are only taxed at the next tax bracket on the income that you earned in the next bracket. I had to look at the tax tables to see what filing status you were looking at, and for what year. I see you were looking at single and tax year 2006.

For 2006 for a single person having taxable (not gross) income of $0 - $7,549 they are taxed at a rate of 10%. For single person having taxable income of $7,550 - $30,649 they are taxed at a rate of 15% for the amount of taxable income above the $7,549 and at a rate of 10% for that first $7,549. For single person having taxable income of $30,650 - $74,199 they are tax at a rate of 25% for the amount of taxable income above the $30,649 and taxed at rate of 10% for that first $7,549 and taxed at rate of 15% for the next $23,100 (difference between $30,649 and $7,549). You are taxed at the higher rate only on the taxable income above the $ amount that takes you into the next tax bracket, not on the entire amount.

Answer 2

You clearly don't understand how the brackets work. Your bracket doesn't mean that you pay that much on every dollar, just on the dollars over the limit for the bottom of that bracket.

The first however-many taxable dollars are taxed at 10%, then the next dollars at 15%, .etc. If you make enough to go into the next bracket, only the top dollars of your income are taxed at that rate, not your entire income.

Assuming both of the people are single, taking the standard deduction, the person making $40K would pay federal income tax of $4376, or 10.94%, even though his bracket would be 25% - he'd only pay the 25% on $600 of his income.

The guy making $100K will have a tax bill of $19,889, or 19.89% of his total income.

$100K is 2-1/2 times $40K, by the way, not 3 times. The guy making the 100K will have paid 4.5 times as much in tax as the guy with the $40K income, even though he just made 2.5 times as much.

If both people are married, and maybe have a couple kids, the percentage difference in their taxes would be even larger. If married with 2 kids under age 17, the guy making $40K wouldn't pay ANY federal income tax. The guy making $100K would still pay a little over $10K.

Answer 3

I agree with LoLo, it is a race thing! I am so tired of the "white" guy getting stepped on! LoLo you're so right. The question was about taxes not about how us white guys are getting the race card dealt on us everyday! I agree with self empl though, work hard get the incentive. Yes, our tax code sucks, but I being a middle class guy can realize that the top earners really do pay in the most tax revenue. Let's not forget how many jobs they have created to generate taxes! We can't blame the President for this one! We think the tax system is crazy now, wait until this universal health care goes into action! Now, everyone that was paying a little something for coverage will elect out of the coverage they were paying for to get free health care. Now, all of us that were working in the lower to middle tax class bracket now will be paying even more! Hold onto your wallets everyone. An unpopular war and President will now lead us to total chaos here at home with regards to wages and taxes!

Answer 4

One of the things left out is the Alternative Minimum Tax (AMT) which usually kicks in at $100K. Which is why you hear people complain about their taxes.

AMT was ogirinally established back in 1970 for about 1500 of the countries richest families. It disallowed many of the deductions that ordinary citizens could take. (The top income tax rate back then was 70%, too.)

Unfortunately, even though the top tax rate has dropped over the years (35% today) and tax brackets have been indexed for inflation, the AMT has never been indexed. It means that a tax 'solution' designed for the richest people to pay more is now labeling simple middle class families as 'rich'.

On top of that, the average citizen is mostly unlikely (statistically) to be audited while those making over $100K are substantially more likely to be audited. IRS audits often disallow legitimate deductions based upon very small technicalities of record-keeping.

Answer 5

The taxes are figured in brackets, as explained in other answers. You can look up the tax paid and see that taxes gradually increase as the person makes more money. There are no large jumps for small changes in income.

Suppose a single person has taxable income of $40,000 (after their standard deduction and exemptions). That person will pay $6,564 in taxes, leaving them with $33,436 and an effective tax rate of 16%.

If a single person has taxable income of $100,000, that person will pay $22,325, leaving them with $77,675. But often the higher income person will pay less, because some of their investment income is taxed at a lower rate of 15%. If the higher income person can manage to have enough of his income from investments, he may pay less percentage tax than the person with lower income.

Answer 6

$100k just isn't what it used to be, especially with such high housing prices and the cost of having kids.

Jaz Iz Me: you've got to be kidding. A consumption tax would throw our economy into immediate chaos and the government would shut down. Poor people spend every dollar they earn, and often more. Sales tax takes up a much larger percentage of their income than it does for the wealthy who are able to save money and spend a much small portion of their income on living expenses.

Answer 7

I'm in favor of doing away with income tax and going to a consumption tax so that the more you consume and spend frivolously on, the more you will be taxed.

For instance, a lower class family that is only making $20,000 per year will only buy the necessities needed to survive therefore will not be taxed as heavily.

Whereas a person that is very wealthy will buy luxury vehicles, name brand clothing, high priced gadgets and non-necessities therefore will pay more in taxes.

~jaz~

Answer 8

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Answer 9

It's called getting rewarded for working hard and being successful. If everyone had the same left over why would I waste my time and money going to college and getting a good job. We would have no doctors, engineers or any other professionals because there is no incentive. I might as well be a walmart greeter. If you don't like it, move to a communist country.

Answer 10

we have a stupid president. dont forget that. and also, in regards to selp-employed up there.. bull$h!t, i work for the damm government, and lemme tell you, its a fkn race card. its who you know, and who got that higher position.
strings get pulled and there u go. a good, high paying job, cuz ur blowin ur boss or whatever, ur the right race, etc. theres ppl who come to work and bust their @$$ off and get things done so that those ppl who come to work in a nice suit and TALK TO THEIR FKN FRIENDS ALL DAY, get the credit for it. again, its a race card, and working for this place, you dont have to be here long to see whats going on.
and for those of you who did go to college and let mommy and daddy pay for it, good for you.. ur lucky. but i bet ur life still stinks andyou walk around like ur $h!t dont stink.
but it does. k. bye.