2013 Itemized deductions and HHI, why is my effective so high, what are we doing wrong?

[Anonymous]

Anonymous wrote:I think that a flat tax around 18-20% across the board would be fair for everyone. No confusing deductions or credits etc... If you still need welfare or social services you can still get them.

I agree that a simpler tax code would be great. I wonder if we will ever see it

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:300 to 500 is the must difficult income level. No benefits of the rich or the middle class. It's sometimes easier to just give up and go lower.

So really, you'd rather take a lower paying job so you don't have to pay higher taxes? That is ridiculous. There is no situation I can work out where you are still not ending up ahead where you are now. More of the myth of "taxes discourage hard work." So stupid.

Um, ever heard of the law of diminishing returns? At what point is the stress and extra costs of being a dual WOHP family worth the incremental income (and increased taxes).

So the people who are complaining are free to move elsewhere and take less pay. Hell I'm considering it and I don't make nearly what they do

It's incredibly stupid for a society that values the work professionals do to tax a lawyer and a doctor who are married to each other so highly that it's more beneficial for one of them to give up their profession, don't you think?

Well, the effective federal income tax rate for income of 200K is only 4% less than the rate at 400K, so I don't see how it is beneficial to give up half your income to avoid paying 4% more in taxes.

[Anonymous]

^^^That's the marginal tax rate, not the effective tax rate. It makes a difference, as this entire thread shows.

[Anonymous]

Anonymous wrote:^^^That's the marginal tax rate, not the effective tax rate. It makes a difference, as this entire thread shows.

Tax owed at 200K income is 43K, or 22%, tax owed at 400K is 108K, or 27%. Difference of 5% in effective tax rate.

[Anonymous]

Anonymous wrote:

Anonymous wrote:^^^That's the marginal tax rate, not the effective tax rate. It makes a difference, as this entire thread shows.

Tax owed at 200K income is 43K, or 22%, tax owed at 400K is 108K, or 27%. Difference of 5% in effective tax rate.

But still you'd rather be making 400k yes?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:^^^That's the marginal tax rate, not the effective tax rate. It makes a difference, as this entire thread shows.

Tax owed at 200K income is 43K, or 22%, tax owed at 400K is 108K, or 27%. Difference of 5% in effective tax rate.

But still you'd rather be making 400k yes?

yes, who wouldn't? Only that one PP above, I suppose.

[Anonymous]

http://economics.about.com/od/taxes/a/Types-Of-Taxes_3.htm

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:^^^That's the marginal tax rate, not the effective tax rate. It makes a difference, as this entire thread shows.

Tax owed at 200K income is 43K, or 22%, tax owed at 400K is 108K, or 27%. Difference of 5% in effective tax rate.

But still you'd rather be making 400k yes?

Do you assume that it takes the same amount of time, intelligence and effort to make $400K as it does to make $100K?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think that a flat tax around 18-20% across the board would be fair for everyone. No confusing deductions or credits etc... If you still need welfare or social services you can still get them.

I agree that a simpler tax code would be great. I wonder if we will ever see it

HIghly doubtful. Just like estate planning has gotten so complex you need an attorney to design a will/trust, tax returns have gone the same, complicated way. Special interests want more tax loop holes so people need to pay experts to work the system.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:^^^That's the marginal tax rate, not the effective tax rate. It makes a difference, as this entire thread shows.

Tax owed at 200K income is 43K, or 22%, tax owed at 400K is 108K, or 27%. Difference of 5% in effective tax rate.

But still you'd rather be making 400k yes?

This also doesn't factor in state taxes.

In my case I work by the hour so every marginal dollar requires additional work. So there is a point where I say that the marginal hour isn't worth it because the returns are low. I posted earlier that our effective federal rate is 37%. When you add state taxes, self funded medicare, etc, it's about 50%. And the marginal rate is higher than 50%. So sure, I want to make more money, but it does get to the point of diminishing returns.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:^^^That's the marginal tax rate, not the effective tax rate. It makes a difference, as this entire thread shows.

Tax owed at 200K income is 43K, or 22%, tax owed at 400K is 108K, or 27%. Difference of 5% in effective tax rate.

But still you'd rather be making 400k yes?

Do you assume that it takes the same amount of time, intelligence and effort to make $400K as it does to make $100K?

Call it intelligence, time, effort, luck, connections, entitlement, divine intervention, eminent domain, whatever you want. It won't make people feel sorry that you have to pay a slightly higher income tax rate (which, coincidentally is partially mitigated by not having to pay Social security on most of your income, which the 100k person has to pay on all of their income). Not understanding the difference between marginal and effective rate and exaggerating your numbers to the point they defy logic for effect does not advance your argument of being so much more intelligent, btw.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think that a flat tax around 18-20% across the board would be fair for everyone. No confusing deductions or credits etc... If you still need welfare or social services you can still get them.

I agree that a simpler tax code would be great. I wonder if we will ever see it

HIghly doubtful. Just like estate planning has gotten so complex you need an attorney to design a will/trust, tax returns have gone the same, complicated way. Special interests want more tax loop holes so people need to pay experts to work the system.

You forgot a couple of special interests: the IRS's 105,000+ employees and is Treasury Department's largest bureau. Corporations went the complicated system because it is easier for them to manipulate and hide their very low (and in some cases negative) effective tax break.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:^^^That's the marginal tax rate, not the effective tax rate. It makes a difference, as this entire thread shows.

Tax owed at 200K income is 43K, or 22%, tax owed at 400K is 108K, or 27%. Difference of 5% in effective tax rate.

But still you'd rather be making 400k yes?

Do you assume that it takes the same amount of time, intelligence and effort to make $400K as it does to make $100K?

Call it intelligence, time, effort, luck, connections, entitlement, divine intervention, eminent domain, whatever you want. It won't make people feel sorry that you have to pay a slightly higher income tax rate (which, coincidentally is partially mitigated by not having to pay Social security on most of your income, which the 100k person has to pay on all of their income). Not understanding the difference between marginal and effective rate and exaggerating your numbers to the point they defy logic for effect does not advance your argument of being so much more intelligent, btw.

There is a difference between making people feel sorry and what is right.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:300 to 500 is the must difficult income level. No benefits of the rich or the middle class. It's sometimes easier to just give up and go lower.

So really, you'd rather take a lower paying job so you don't have to pay higher taxes? That is ridiculous. There is no situation I can work out where you are still not ending up ahead where you are now. More of the myth of "taxes discourage hard work." So stupid.

the "most difficult income level". HAHAHAHAHA. you should try my income level (75k gross) and see how difficult things are....

At 75K, you don't try to save any money. You'll retire on social security only, and your kids will get a full ride to college. That'll save you a few million right there.

??? People who make 75k won't get any more in social security than people making $400k will. WTF are you talking about?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:^^^That's the marginal tax rate, not the effective tax rate. It makes a difference, as this entire thread shows.

Tax owed at 200K income is 43K, or 22%, tax owed at 400K is 108K, or 27%. Difference of 5% in effective tax rate.

But still you'd rather be making 400k yes?

This also doesn't factor in state taxes.

In my case I work by the hour so every marginal dollar requires additional work. So there is a point where I say that the marginal hour isn't worth it because the returns are low. I posted earlier that our effective federal rate is 37%. When you add state taxes, self funded medicare, etc, it's about 50%. And the marginal rate is higher than 50%. So sure, I want to make more money, but it does get to the point of diminishing returns.

It sound like you think it's a bad thing that there are diminishing marginal returns to increasing your hours of work. But I don't. I'd rather see two people get jobs of 30 hours per week than one person have a 60 hour per week job. So actually, I think it's a good thing if you decide it's not worth it to work more hours.