If I’ve got infinite income and I don’t do anything that would reduce my tax what percentage would I be paying?
The top US tax bracket is 35%. Cite: http://lmgtfy.com/?q=top+us+tax+bracket&l=1
But there’s also the alternative minimum tax that would kick in.
From everything I can find, the AMT doesn’t go above 28%. So 35% would still be the tax bracket.
Yeah, it’s way more complex that just 35%. There’s state income tax (which I’m assuming is included in the OP’s question). It’s also possible (for some combinations of state of residency / state of employ) to have to pay income tax to two states.
It’s kind of a meaningless figure, since what you really need to consider is your total tax burden. That would also include social security, medicare/medicaid, state taxes, local taxes, property taxes, sales taxes, etc. and it would be upwards of 50%
So I’d be approaching 35% if I earned $10 million and had no deductions.
I was wondering about a Michelle Bachman quote where she claimed many Americans pay half their income in taxes. She must be including other taxes so if I spend several times my income on booze and cigs and whatever has a high tax on it what could I be paying?
I’d like to point out that the limit as income->infinity is infinity. A hard thing to conceptualize, I know, but that’s what happens when you’re dealing with nonreal numbers.
Tax= .35(i-y) +$x
where i is income, y is the max of those lower brackets and x is the tax at the next lowest bracket. It doesn’t really matter what they are, though, because when you plug in i=infinity, you get infinity back.
So you really do have to pick a number to plug in there, or the range is boundless.
ETClarify: That’s in dollars, though. The % asymtotes at 35%
Hawaii has a max state income tax of 11%. So with that plus the federal, you’ve got a cool 46% - add in property tax and sales tax, plus city income taxes, and it’s quite possible that you could be over 50%.
But you’d also be making a mint, and I wouldn’t really feel that bad for you. Poor Unca Scrooge. You only get to swim in half of the money that could be in your money bin.
Also, “many” is a meaningless word. 1000 people could be “many”. But it’s a tiny percentage of the total number of Americans.
If you were spending “several times” your income on stuff like that, you would effectively pay 100% of your income in taxes. Until the debt piled high enough that you would have to declare bankruptcy, or commit suicide, whichever comes first.
At that level of consumption, a natural death is a distinct possibility.
You also only pay income tax for a given bracket once your earnings exceed that bracket. So even if your in the 35% bracket, your not paying 35% of your income in income tax.
Yes. You never reach the percentage of the top tax bracket, though with infinite income, you will approach it.
But a lot of those top out at fairly low figures. For most purposes, the number the OP wants is 35% + top State Tax bracket of his state.
Or as I have told hwaaaay too many people “Yes, if you win the CA Lotto, you will have to pay around a third of that to the Feds*, not half, nor nothing, nor 95%.”**
- In CA, CA Lotto winnings are not taxed by CA.
** all of which are commonly beleived.
Don’t forget the box on your tax form for donations to reduce the national debit. You can get rid of it all when you pay your taxes. Of course only the crazy or absentminded ever check that box.