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Basically, there should be no curves between 0% and 10%... only Cobra knows what else he got wrong...
I did read it. I still call bull . Even if it's plotting the effective tax rate after deductions and exceptions, with the current schedule, there's no tax rate (effective or otherwise) under 10%.
As I said earlier, even if you have $1 in taxable income, the minimum rate is 10% under the current tax rate schedule.
Basically, there should be no curves between 0% and 10%... only Cobra knows what else he got wrong...
Example: Looking at the graph, you would think a married couple filing jointly with earnings of $50,000 would be paying 4% tax rate. There's no such thing. If after deduction and exceptions they still have taxable income, they'll be taxed, at the very least, 10%, which is the very first tax bracket on the schedule.
I think you are arguing different things. You are correct to say that when a dollar is taxed it has to be at a minimum of 10%. At first read, and after looking at the chart again I took it to mean when you factor standard deduction and personal exemption and nothing else and then divide that taxes due into gross income you get the effective tax rate. You factor all the deductions in and the graph would start in negative territory for the folks that get more back than they pay in.
I see what he tried to do there now.
That's neither "tax rate" or what's known as "effective tax rate" (which is calculated using the actual taxable amount). An effective tax rate calculation also can never be below 10% (if you're paying taxes, you're paying at least 10% of the taxable income, if you go over more than one bracket, then you can calculate the effective tax rate depending the amounts and percentages you paid on each bracket).
So at least we know WC is talking apples and oranges. No surprises there.
BTW, the numbers look bogus too...
Married filing jointly with gross $50,000 using 2012 numbers:
Personal exception: 2x $3,800 = $7,600
Standard deduction: $11,900
Taxable: $50,000 - $7,600 - $11,900 = $30,500
$17,000 taxable at 10% = $1,700
$13,500 taxable at 15% = $2,025
Total tax: $3,725
Effective tax rate: 12%
Percentage of tax over gross: ($3,725 / $50,000) * 100 = 7.45%
On the graph is ~4%...
Here was the original question:
When I take my gross pay and divide my federal income tax liability into it for 2011, I paid 13.7%
Anyone else?
This was the initial question. What percent of your gross earnings goes to federal income tax.
The thread started with a discussion of "tax rates", which normally is not that measure. I did miss your post though.
All that said, apparently that chart is bogus regardless.
Sure it can. Throw the EITC in there and all bets are off on percentages.I see what he tried to do there now.
That's neither "tax rate" or what's known as "effective tax rate" (which is calculated using the actual taxable amount). An effective tax rate calculation also can never be below 10% (if you're paying taxes, you're paying at least 10% of the taxable income, if you go over more than one bracket, then you can calculate the effective tax rate depending the amounts and percentages you paid on each bracket).
So at least we know WC is talking apples and oranges. No surprises there.
The EITC will either make you a non-payer or reduce your taxable amount. Whatever is left is still taxed at 10% or more, which is your tax rate.
But this also highlights the worhtlessness of such graphs. Deductions are far from the same for different people, and credits like the EITC can throw some of that out too.
As it pertains to this argument and the argument that is being made against Romney is the taxes he paid relative to his income for a given year. This makes the tax rate irrelevant. So if we focus on that what becomes the fair rate?
The beauty of all this bull is the government has their citizens fighting amongst themselves on what we should pay. And a significant portion is arguing for others to pay more. The true argument should be what is the government doing with the dollars they receive. At the end of the day raising taxes on the top 1% or even those making more than 250k a year is fine. But if that isn't enough do we come back and raise it again? Then again? At what point do we redirect the light to our government and their complete inep ude to manage the money we give them?
Actually the EITC does not reduce your taxable income - it directly reduces your tax liability after you have already calculated the tax you owe. It even turns into a refund if the tax credit is for more than the tax you owe.
Well, when it comes to Romney, the alleged issue is that he "only" paid circa 20% for income in the million dollars, whereas the bracket for such income would be at a higher percentage (unless his earnings were mostly through capital gains, which are taxed at a lower rate), and that he used offshore accounts and loopholes to pay less (which, let's be frank, happens and is done by more than just Mitt Romney).
The reality is that Mitt is likely not doing anything illegal, and he didn't write the loopholes either. Good for him that he can afford the accounting people that let him keep more of his money.
While I agree there's wasteful spending, the big dilemma has always been what to cut. The reality is that the MIC doesn't want the military contracts cut, the population in general doesn't want SS or Medicare to be cut (as seen in this and previous election, that's a sure recipe for political suicide). Every Congressman is trying to earmark stuff and bring more water to their state.
And so we arrive that even if we made a modi of cuts on some of this stuff, it would likely not be enough to close the gap on the deficit anyways.
I agree with CC that there should be some cuts, and there should probably be some tax increases. Only on the rich? I don't know. Something to debate.
But this whole thing is much more complicated in general than "class warfare!" or "the rich need to pay more!". There's the loopholes, the tax system itself which is a mess, the current high volume of baby boomers overloading Medicare/SS, the warmongering, which isn't free. It's all interwinded one way or another. We just get the bill every year.
Taxable income = AGI = After deductions and exceptions. The EITC is applied against that. If after applying the tax credit your taxable income is 0 or negative (you're getting money back), your tax rate is effectively 0% (you fall outside of any of the tax rate schedule brackets). If it's still positive, you pay 10% or more.
Maybe you need glasses?
Stop stretching in trying to find fault in me. It not only shows poor character on your part, but proves you to be a partisan hack. Mike and Ploto very clearly pointed out the facts, yet you still stretch to find fault.
Pathetic...
No. EITC is just that, a credit. It is not applied to reduce your taxable income. After you calculate your taxable income and calculate the tax you owe on that, then you start deducting your tax credits such as EITC directly from your tax liability. For example, if you qualify for a $2000 EITC, it does not reduce your taxable income by $2000; it reduces your tax liability by $2000. If your tax liability is less than $2000, then you even get the extra back as a refund.
Oops. I probably do. I take back the numbers are bogus.
Nah, I didn't know what those percentages were. Too small for actual tax rates.
Okay, I see what you mean. Your tax rate though is whatever was calculated to apply to your taxable income.
Given the direction this election seems to be going it is time the Republicans comprimise. Something they should have done 2 years ago. I think with the results of the midterms they were emboldened to stand their ground with the hope of winning the senate and presidency. Our government has done too little for too long. My hope is more accountability is given to how these tax dollars are being spent. If I was a betting man, when the republicans start to change their image from obstructionist more people will start to listen and investigate their message.
IMO, the GOP is going through some internal tensions, but it will pass. With a little less radical message/platform, I think they would've taken this election fairly easily.
I don't. The Republican party can't win the election because they continue to offer nothing other than trickle down economics and bible thumping. Interntal tension plays a role in why they can't win but their ty ideas are the bigger reason why.
The law passed in 2008 to make it $5m from $3.5m expires at the end of the year to become $1m in 2013.
It's not talked about. It's done.
First of all, I was never calling this a tax rate. Again, I will ask you to refrain from creating fault in what I say. It makes you look like an ass. I specifically stated federal tax liability divided into gross pay. I did not say adjusted gross. The only place I say "tax rate" is when I presented the graph, saying I took it from the "tax rates."
ElNono...
You are trying to change the argument. Just admit you were in error and discuss this.
I am trying to get people to see the real percentage of taxes they pay from their income. Not a position on a piece of paper.
For the most part, the people who have responded have a pretty good grasp on the effective tax rate they are paying and most pay a higher effective tax rate than Mitt Romney. Great point!
I said you were right and I was not. Not sure what you want. A pencil and paper apology?
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