How Overtaxed Are You, Really?
Note: This article refers to federal tax only. If you want to mix it up about local or state taxes, be my guest, but if you're a suburbanite, you're not gonna win this one, trust me.
Just submitted my federal income tax return. My marginal rate is 25%, and of course we all pay social security + medicare of around 8%. So, if I were one of the 'wingers at my last jorb, I'd be bitching about the feds taking a third of my income.
Yes, really. That's the way they operate. They willfully conflate marginal tax rate with effective tax rate (i.e., ignoring the fact that the first N dollars of their income are taxed at a far lower rate than the last M); AND they ignore the effect of all their various and sundry deductions. Here's a handy calculator showing both rates.
What's worse are the ones who are in the next marginal tax bracket, and then get to claim that THEIR overall tax rate is (28 + 8) = 36%.
Luckily, thanks to TurboTax, I also get an "effective tax rate" number. It's 8.27% this year. (Add social security + medicare, and you get up to about 16.25%).
And I guarantee you that most of those whining 'wingers are in the same boat as me - big mortgages, big property tax bills, multiple dependents, etc. Oh, except for the ones in that 28% marginal bracket. Don't forget that the social security tax ENDS at about $90,000 - so the income over that is NOT subject to the social security part (6.2%) and thus the marginal rate is much lower. So it's actually fairly likely that some of those people in that bracket pay a LOWER effective tax rate than some of the 25%ers.
16.25% (8.25% income tax) just doesn't sound like overtaxed enough to justify cutting taxes more, now, does it? So they complain about a 33% overall burden, and meantime, we continue to move further and further away from a progressive tax system in reality.