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

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

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]^^^That's the marginal tax rate, not the effective tax rate.  It makes a difference, as this entire thread shows. [/quote]

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

But still you'd rather be making 400k yes?[/quote]

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. [/quote]

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.[/quote]

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