@Woiyo9,
Perhaps you missed it when I listed the 3 things that people do when they try to get to 50%.
Woiyo9 wrote:
Why don't you tell me how much YOU earn and how you earn it.
Fed Tax at 38%
State at 5.5%
Excise Tax 1%
Real Estate Tax 4%
Sales Tax est 5%
That's alot of taxes being paid out and now Obama wants some more.
You can't add up those numbers to figure out what you pay in taxes.
1. You don't pay 38% Fed income tax on all your income. (There isn't even a 38% tax bracket presently. ) No one pays the top amount on all their income.
Tax Rate Single Married Filing Jointly
10% Not over $8,025 Not over $16,050
15% $8,025 - $32,550 $16,050 - $65,100
25% $32,550 - $78,850 $65,100 - $131,450
28% $78,850 - $164,550 $131,450 - $200,300
33% $164,550 - $357,700 $200,300 - $357,700
35% Over $357,700 Over $357,700
You get a personal deduction. You get other deductions. If single you pay 10% on the first $8,025, 15% above that to $32,550, etc. According to the IRS the highest average that any group pays in total income tax compared to their income is about 25%. Those making over 10 million only pay about 20% of their income in income taxes.
2. Assuming you live in Ma, you pay 5.3% on every taxable dollar. Ma has a deduction so again you are making money that has no state income tax. I know of no state that taxes every dollar earned.
3. Excise tax is paid on items bought. There are several excise taxes. Gas being one of the more prevalent that is paid to both state at feds. Assuming you pay excise tax on every dollar that doesn't go to state and Federal income tax that leaves you with about 70% left so if you pay excise on every dollar left it is about.7
4. Real Estate tax is based on property, not on income. Assuming your house is valued at your income you probably pay about 1-2%. Just for the sake of argument we will take the 4% of your income figure and assume all the property is paid off so your wealth is over $1,000,000. Of course if you are paying 4% of your income in property taxes that reduces the amount of money you have left over to pay excise and sales tax by that amount. It also increases your deductions for federal and state taxes so drives those down. (We'll ignore that for this exercise.)
5. Sales tax can only be paid on what you have left over after you pay income taxes and real estate taxes.
For someone single making $1,000,000
1.
32.5% Let's assume you make $1,000,000 and only take the standard deduction. The maximum you can pay in Federal tax is 32.5% of your income. (Of course if you were smart and paying 4% of $1 million in property taxes you would have $40,000 in deductions plus the 50,000 you are paying for state income taxes which reduces your taxation to about 29%.)
2.
5.5% Let's assume you get the same state deduction as federal and 5.5% rate. That puts it at 5.45 with no deductions and about 5.2% with deductions.
4.
4% Real estate is moved here to do excise and sales tax.
3.
0.7% is all you can pay on the 68,000 you have left after income and property tax if everything you buy is subject to excise tax.
5.
3.2% is all you can pay in sales taxes on the money you have left if you spend it all on items that require sales tax.
Grand total -
47.9% if you make $1,000,000 , don't do your taxes correctly and spend every penny you earn. (Assuming all of the $1,000,000 was earned in wages. Long term capital gains are at 15%.)
Now just for the heck of it, we will add in FICA that is paid on the first 93,700 of income and Medicare on all of it. Assuming the person is not self employed.
6. Fica including Medicare - 2% It's 49.9% until you do the correct math and subtract the money paid for those taxes from the sales tax figures.
3. .6% after reduction
5. 3.1% after reduction.
That puts it at 49.7% if you don't bother to itemize on taxes and manage to spend every dollar you have left over after taxes. No one in reality does the scenario I just posted. They would have to own the property out right which means they probably have enough wealth to have other investments that pay 15% capital gains tax.
Of course, if you are married, have investments that give you income, do your income taxes correctly, save some of your income instead of spending it all, pay interest on a home mortgage etc, your tax burden goes down from that 49.7%. Simply assuming a home mortgage, using tax payments and interest as deductions, a 5% savings rate drives the tax burden including FICA down to about 43%.
