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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.

This entry was posted in the following categories: Economics , Politics (Outside Austin)


After paying your income tax, you get to pay corporate income tax. Every product you buy from the grocery store has corporate income tax and other taxes built in to the price. It's very hard to calculate just how much of the average wage slaves' income is dedicated to feeding the beast.