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GORDON 
90%
Group: Super Administrators
Posts: 36125
Joined: Jun. 2004
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Posted on: Dec. 19 2009,05:27 |
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Dumb question, but here it is:
American income tax is graduated based on income. Â The more you make, the higher percentage you pay.
Does this mean, for example, that if tax thresholds are to pay 10% below $60k, and 15% $60k+, then you only pay 10$ up to $60k, and 15% on money made after $60k?
I always thought a person making $70k would pay the 15% on the entire amount, period. Â Someone is telling me otherwise.
Edited by GORDON on Dec. 19 2009,05:28
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I don't give a fuck!
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TPRJones
I saw The Fault in our Stars opening night.
Group: Privateers
Posts: 12384
Joined: May 2004
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Posted on: Dec. 19 2009,06:01 |
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That sounds right to me.
That's why income tax booklets come with tables. If it were just 10% of the total it would be simpler and no tables would be needed.
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Vidi Perfutui Veni
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GORDON
90%
Group: Super Administrators
Posts: 36125
Joined: Jun. 2004
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Posted on: Dec. 19 2009,06:08 |
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Then why do people scramble at the end of the year to give to charity, and sneak under a line, if just a tiny bit of income above that line is affected?
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I don't give a fuck!
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TheCatt
Top 2%
Group: Super Administrators
Posts: 22951
Joined: May 2004
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Posted on: Dec. 19 2009,08:51 |
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Base income tax is in steps, like you describe.
First X of income is taxed at 10%.
From X to Y is taxed at 15%
From Y to Z is taxed at 20%
etc...
The only reason to sneak under lines is due to phase-outs and other issues. Because of the complexity of the code, and the number of phase-outs and such, your taxable income can dramatically change the effective tax rates of a given amount of money.
Phase outs
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It's not me, it's someone else.
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TheCatt
Top 2%
Group: Super Administrators
Posts: 22951
Joined: May 2004
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Posted on: Dec. 19 2009,08:53 |
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There's all sorts of stuff like education credits, Roth IRA/IRA qualifications, etc. A few years ago, if we had reduced our income by about $1k, we would have been eligible to deduct a few $k of education expenses, but didn't know it until too late. So, by moving charitable deductions from one year to another, we could have saved a lot of money.
Crap like this is why Mommy D gets work.
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It's not me, it's someone else.
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