Quote:
Originally Posted by whell
We're addressing two separate subjects: marginal or effective rates (you) versus taxes on W-2 earnings (me). You suggest my numbers are misleading by posting something unrelated. Interesting debate strategy...
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Okay, I'm trying here. Correct me if I'm wrong, but "marginal" tax rates refer to the higest level of tax you pay. We have a graduated taxation system and the marginal tax rate applies to the highest level of taxes you pay. It is a number, as I understand it, that is much higer than your average tax rate. Your average tax rate, again, as I understand it, refers to the percentage of tax you pay on all your income- that is, at all the rates that apply to you up to and including the portion of your income on which you pay the marginal rate.
So, no, I have no idea what you mean when you simply say "taxes on W-2 earnings". That doesn't say anything. Do you mean averge tax rate? If so, you're making your case worse as I'm reasonably certain that your 44% fiugre is speaking to a marginal rate. No way anyone is paying 44% on ALL their W-2 earnings.
Try this:
http://www.dinkytown.net/java/TaxMargin.html
If you are single, no dependents and make $1M a year (pretty sure that's none of us) you *still* only pay 32.4% average tax rate on W-2 income, putting nothing in an IRA, nothing in a 401k and with
NO DEDUCTIONS AT ALL. I can't figure out a way to make more of a "worst case scenario" as I'm almost sure that would be virtually no one in the United States.
So, yes, please tell me where I'm doing anything but giving you the most favorable counter to your argument. If you are talking about average tax rates your figures are even MORE misleading than I made them out to be.