How many people here understand what taxable income is and how marginal tax rates work?

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09/04/2012 10:52

Subject: How many people here understand what taxable income is and how marginal tax rates work?

quote

Anonymous

I am getting the distinct feeling by reading these threads that very few people do. I am assuming the rest of America understands even less, and that is a scary, scary thought.

I keep hearing people scream that they make $250K per year and Obama is going to raise their taxes. First, unless you have zero pre-tax withholdings, zero insurance premiums, and zero deductions, adjustments or exemptions (which is impossible), your taxes will not increase. Second, unless you are well above the $250K mark, the tax increase is pretty negligible.

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09/04/2012 11:53

Subject: Re:How many people here understand what taxable income is and how marginal tax rates work?

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Anonymous

And even if you do fall into that battered 1%, the chances that you created a single job this year are even less than 1%. So pay up and shutty.

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09/04/2012 12:03

Subject: How many people here understand what taxable income is and how marginal tax rates work?

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Anonymous

Kind of calls the whole democracy thing into question, doesn't it?

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09/04/2012 12:06

Subject: How many people here understand what taxable income is and how marginal tax rates work?

quote

Anonymous

I'm a CPA and work with many well-educated individuals who really haven't a clue about how taxes work. Not even the basics of what determines whether you get a refund or have to pay at year-end. So yes, I think it's a very accurate (and scary) assumption that many people do not understand tax vernacular or concepts.

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09/04/2012 12:10

Subject: Re:How many people here understand what taxable income is and how marginal tax rates work?

quote

Anonymous

Anonymous wrote:And even if you do fall into that battered 1%, the chances that you created a single job this year are even less than 1%. So pay up and shutty.

Does this mean anything?

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09/04/2012 12:12

Subject: How many people here understand what taxable income is and how marginal tax rates work?

quote

Anonymous

I think the government should make everyone show the tax due divided by gross income if for no other reason than to provide people with an accurate sense of how much they pay. It would be like the disclosures on loans and fees.

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09/04/2012 12:19

Subject: Re:How many people here understand what taxable income is and how marginal tax rates work?

quote

Anonymous

Anonymous wrote:And even if you do fall into that battered 1%, the chances that you created a single job this year are even less than 1%. So pay up and shutty.

Not the PP, but I guess I am in your 1%. I am right on that margin, and I hired a nanny. That negligible increase does make a difference to me and if it increases too much, I will have to let my nanny go.

I am a believer in we all got ourselves into this mess, we should all be a part of getting ourselves out of it. The democrats seem more intent on paying entitlements to more than 50% of Americans than getting at the root cause of our fiscal problems. All I hear is that I make too much. I don't make too much. It would be different if I lived in Iowa, but I live in suburban DC, and my $200K, which varies with the economy, doesn't go very far. If I have a successful year in my business, I'll get hit. Why should I bust my butt to have a successful year, then? Such a disincentive.

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09/04/2012 12:23

Subject: How many people here understand what taxable income is and how marginal tax rates work?

quote

Anonymous

Anonymous wrote:I think the government should make everyone show the tax due divided by gross income if for no other reason than to provide people with an accurate sense of how much they pay. It would be like the disclosures on loans and fees.

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09/04/2012 12:24

Subject: How many people here understand what taxable income is and how marginal tax rates work?

quote

Anonymous

I'll add to that one, OP (and CPA)

Can you tell me why Democrats can't speak to the difference between income and wealth?

It's clever to call a high income earner a "millionaire/billionaire" but you both understand the difference, as do the dissemblers.

These posts would be much more honest if once in a while we'd admit there's plenty of lying to go around.

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09/04/2012 12:49

Subject: Re:How many people here understand what taxable income is and how marginal tax rates work?

quote

Anonymous

Anonymous wrote:The democrats seem more intent on paying entitlements to more than 50% of Americans than getting at the root cause of our fiscal problems. All I hear is that I make too much. I don't make too much. It would be different if I lived in Iowa, but I live in suburban DC, and my $200K, which varies with the economy, doesn't go very far. If I have a successful year in my business, I'll get hit. Why should I bust my butt to have a successful year, then? Such a disincentive.

So you'll gladly accept less money because you're worried you'll pay too much in taxes?

And let me guess, you believe 50% of Americans don't pay any taxes -- as if FICA and sales taxes don't exist in your world.

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09/04/2012 12:55

Subject: How many people here understand what taxable income is and how marginal tax rates work?

quote

Anonymous

My dad made me fill out my own 1040EZ from the time I was 16. MAKE YOUR KIDS FILL OUT THEIR OWN TAX RETURN. I cannot believe how many people have never filled out their own tax returns. I still do my 1040 on paper most years because I find the software gets in the way of me actually understanding how my taxes are calculated.

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09/04/2012 12:57

Subject: How many people here understand what taxable income is and how marginal tax rates work?

quote

Anonymous

Anonymous wrote:I think the government should make everyone show the tax due divided by gross income if for no other reason than to provide people with an accurate sense of how much they pay. It would be like the disclosures on loans and fees.

Ok I'll start. Our number is 42. What's yours?

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09/04/2012 12:57

Subject: Re:How many people here understand what taxable income is and how marginal tax rates work?

quote

Freeman
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Joined: 06/02/2012 13:46
Messages: 191
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Anonymous wrote:Not the PP, but I guess I am in your 1%. I am right on that margin, and I hired a nanny. That negligible increase does make a difference to me and if it increases too much, I will have to let my nanny go.

I am a believer in we all got ourselves into this mess, we should all be a part of getting ourselves out of it. The democrats seem more intent on paying entitlements to more than 50% of Americans than getting at the root cause of our fiscal problems. All I hear is that I make too much. I don't make too much. It would be different if I lived in Iowa, but I live in suburban DC, and my $200K, which varies with the economy, doesn't go very far. If I have a successful year in my business, I'll get hit. Why should I bust my butt to have a successful year, then? Such a disincentive.

You'll "get hit" with what exactly? If the proposed changes were implemented(Taxing income over $250k), do you realize how you would be affected? I have no idea what you make in a successful year, so I'll use a $300k year for my example. Under current rules with no deductions, credits, or other factors taken into account, that extra $100k(Going from $200k to $300k) would mean you would pay an additional $33k in taxes, at a 33% rate. If the proposed taxes on those making greater than $250k was passed, the rate on the amount above $250k would be taxed at 36% instead, meaning you would pay a total of $34,500. A grand total of an extra $1500. I'd hardly call that getting "hit", particularly when it would only amount to .5% of your annual income. If you only made $260k, the difference would be $300.

Given those numbers, under what circumstances under the proposed tax system would you feel it would not be worth it to have a successful year? By your own statement, you can get by with $200k. To pay even that extra $1500 in taxes, you would have to earn an extra $100k above that. I can't see any scenario where you wouldn't still have a strong incentive to earn more money. My household income is actually close to the $250k mark as well, and I expect to surpass it within the next two years or less. However, I understand that the differences under either scenario are minor at that level of income, and the only way it would affect anyone's incentive to earn more is if they truly don't understand how the marginal tax rates work. Would you really turn down a $100k in order to not pay $1500 in taxes?

profile p.m.

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09/04/2012 13:03

Subject: How many people here understand what taxable income is and how marginal tax rates work?

quote

Anonymous

This is just bullsh*t - this lie about how Obama only wants to raise taxes on the rich like some Robin Hood.

Here is the truth: The Democrats, over and over again, have tried to block extension of the Bush tax cuts, which would raise taxes on EVERYBODY (unless you are at the poverty level).

Secondly, Obamacare is a TAX (per the supreme court) on EVERYBODY who cannot or does not purchase health insurance. And you all can cite to various exclusions from this tax, but being a veteran tax lawyer myself, I know lots of people who cannot afford a CPA will fall through the cracks, get mailed a tax bill, plus interest and penalties, etc. This whole thing is a disaster - and they still will have NO HEALTH INSURANCE. This is like the opposite of Robin Hood - kicking a dog when it's down (i.e., taxing you and penalizing you because you cannot afford health insurance).

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09/04/2012 13:06

Subject: How many people here understand what taxable income is and how marginal tax rates work?

quote

Anonymous

Anonymous wrote:I'll add to that one, OP (and CPA)

Can you tell me why Democrats can't speak to the difference between income and wealth?

It's clever to call a high income earner a "millionaire/billionaire" but you both understand the difference, as do the dissemblers.

These posts would be much more honest if once in a while we'd admit there's plenty of lying to go around.

In case you didn't think of it, people who earn $1m+ in annual income are (unless they are total fools) much richer than millionaires. So in reality, they are being conservative by using the label. They could really say "people who earn $1m in a single year" but that's a mouthfu.

So is it inaccurate? Sure. Are they bending the truth to their advantage? No, they are using a shorthand that actually does not benefit them.