Let’s move this over to GD.
Colibri
General Questions Moderator
You can post as much or as little as you like, but you can’t make comments like this about other posters. It’s against the rules and it’s obnoxious.
How can we possibly support as many people receiving government money, as there are non-government employees?
I’d like to include those unemployed people who receive entitlement program benefits in the first number.
This can be measured by counting the people, or summing the money for each of the 2 cases. Any guesses before we begin? Can you name a city or state where the 1st number of people exceeds the 2nd?
Well, for unemployment, employed people and their employers pay into an unemployment fund. Last time I checked, there are many more employed people than people receiving unemployment assistance.
And even unemployment checks are taxable.
You forgot to count government employees which is significant.
Yes, they pay taxes too.
Sure, but I imagine the contribution per head is smaller than the benefit per head
Thank you for emphasizing my point before ending this thread on GQ. I will stop posting here to please you instead of insulting the readers who know how to Google. I hope that was polite.
Moderator Note
Posts #120 and #123 were started as separates thread in GQ. I have merged it with this one since they are on similar topics.
Colibri
General Questions Moderator
Thanks for the help! Now nobody can see it?
I feel they are rather different.
Certainly I wanted them to go in different directions.
The moderator has combined 4 of my topics into this thread. If you’re interested scroll up they’re all in page 3. I’d rather continue that discussion than simply dividing:
government spending / total personal earnings = 50%
Doesn’t that concern anyone?
Yes or No question?
Where the hell are you getting these numbers?
Tax rates are on taxable income, after deductions, not on total income. So if someone has $30K of deductions, the first dollar after that is taxed at the lowest rate. This is true for state tax also. I don’t remember where the maximum bracket kicks in, but the person making $200K is not going to be paying anywhere near 50% of the delta between deductions and his income on state and federal income taxes.
And where do you have a tax rate of 20% on spending? Even California isn’t at 10%, and we are relatively high.
And most people who get paid overtime (lucky exempt people like me don’t get any) aren’t anywhere near the top bracket, and so won’t be paying 50% on incremental revenue.
As an aside, I wonder if doing taxes using a computer has made people lose touch with how the system works. When I used to fill out returns by hand, I could see the relationships a lot better. The report at the end of the line in Turbo Tax is fine, but by that time you want to get out of there.
I am guessing with the 10-20%. I mean to include all taxes besides income tax in that figure. It is nearly as much as income tax. Not just sales tax. Certainly it is in the range I specified for most people. Property tax. Estate tax. Fees.
I made a few assumptions which I specified. You can tell me they are unrealistic if you feel that way. I assumed that none of your tax deductions will change if you earn an extra $200 a week. You are spending this money on something fun. I assumed your marginal income tax is 50% like most people including SSFICA. The amount you get to take home in your paycheck is 50% when you increase your weekly income. The delta.
You are correct, many people getting paid by the hour are in a lower bracket. How about a salary raise? The effect is the same.
Yes, computers have made taxes harder for us to understand compared to doing it by hand. Once I spent 2 hours trying to understand a page that looked like this:
Multiply line 1 x2.5 enter it here
Subtract line 24 on 1040a from line 3
Add these 2 together unless 4 is greater than 1
Put the lesser of 1 and 4 from page 1 here
If 7 is bigger than 8 enter 0 otherwise negative of line 7
This went on until the page was filled over 20 lines. In the end there was only ONE output from this simple algorithm. When I say simple I mean each line by itself. It took a spreadsheet to understand what was going on. You had to automate or plug in a range of numbers into 3 variables or cells to graph the output. I believe the point of all this is to hide the formula from 99% of all people. I have not found a tax accountant who could explain it to me after I was done and completely understood it, while pretending not to.
That’s an interesting point you made! I agree.
If you have very low income, it is true that your sales taxes will equal or exceed your income taxes. That is why they are regressive. I assure you that sitting at around $200K in gross income they don’t even come close.
Property taxes depend strongly on the value of your house and where you live. I’m in California, and mine are based on my house’s value 16 years ago, and it is not a big number relative to its value now. Fees are for specific services. If you have municipal trash pickup, the fee is no different from paying for private pickup, and isn’t really a tax. And if you have ever paid estate taxes, the old GD poster who strongly believed in life after death was correct after all. What kind of internet connection do you get in heaven? 
No, your deductions will not change. FICA, however, stops at about $110K of income, so the hypothetical earner will only pay this on half his income, and in fact sees an effective take home pay increase around July. Remember also that tax is being taken out of that extra $200 a week, so you are likely to do fine. I don’t know the details of the accounting, and of course I’m assuming you don’t work for crooks who don’t deduct your taxes like you seem to. I don’t get overtime but I often get a bonus, and it has usually been the case that the taxes taken out of it are more than I wind up paying, even at the marginal rate.
Just like the bonus, more money will be taken out at the marginal rate. I’ve never had a tax liability due to a bonus or a raise, even back in the early '80s when high inflation meant that the average raise was a real whopper, as my boss used to say.
I’m a programmer, and I design algorithms for a living, and I hated those also - especially since you usually wound up with a 0 at the end so it didn’t matter. It would be far easier if expressed as one equation, but then no one would get it right. Our taxes are a lot more complicated now then they were then so it would really be a nightmare without software. In fact we’d go to an accountant and pay a lot of money for not much better results.
I can confirm all of this. I get an effective pay bump during the year corresponding to getting past the income cap for FICA contributions.
We also have our bonuses spread through the year. The bonuses are, of course, taxed. As in your case, often more is taken out than I end up paying.
In no case do the total taxes I pay (sales included) end up close to 50% of my gross. Between the money invested, saved, donated, spent, etc, I can easily account for about 70% with the remainder representing income and property taxes. Of course, some of that is spent on other taxes (sales, utility, and various registration fees, primarily) but not enough to drop the figure to anywhere close to 50%.
Also, I got a small raise last year. The marginal take home after taxes was measurably more than 50% of the amount of the raise. My spending did not increase last year (i.e. no additional sales taxes).
Let’s talk about paychecks only for a moment. Take home pay. The amount you deposit when you cash your check. You do not agree that marginal tax is >50% for many people? 35% + 15% for SSFICA. Assuming the correct number of dependents on your W-2.
After we answer that question… You get back a significant amount of this increase or change when you do your taxes? How is this possible? Certainly it depends what you spend it on. If it’s deductible or not.
“Marginal”?
I don’t think that word means what you think it means.
If your marginal tax rate is 35%, the average SSFICA portion is LESS than 15%, since you’re not going to be taxed on a good portion of your income later in the year.
As it’s February, I’ve already started doing my federal taxes (which includes consideration of state taxes), and your numbers aren’t even close to what I’m seeing. On the other hand, I live in Texas, which happens to have lower average taxes than many states.
You might want to check this site’s estimate for tax freedom day, which does factor in local and state taxes. It doesn’t include some state fees but does include sales/property/excise taxes. So, it doesn’t vary the results much. Even at worst, the overall average taxation level doesn’t even reach 35%, much less 50%.
Somebody’s “marginal” taxation on the last dollar earned MIGHT reach 40% (35% plus sales and what not) but their overall average won’t even get close. Once your income gets that high, a good portion of your income will come from capital gains, dragging your overall average down.
As stated before, you seem to have not the first clue of what “marginal” means.
Marginal does not mean that your whole paycheck is taxed at a 35% rate. It is exactly the opposite: if you look at your paycheck, and you are a high income earner, only one part of your income will be taxed at the 35% rate. Other parts of your income are taxed at the 10%, 15%, 25%, and 33% rates.
It is literally totally impossible to have one’s entire paycheck taxed at a 35% income tax rate, especially because we haven’t even considered deductions and exemptions. Plus the employee doesn’t pay half of the FICA anyway.
I understand what marginal means. We agree on the definition.
Then why are you using the word incorrectly?
The total amount all levels of government make in taxes is known. The total declared income of all citizens is known. Divide. Whatever you arrive at is still the upper bound as under the table income is not reported and the wealthy pay a larger percentage.
What’s the difficulty in understanding this?