Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
On the face your example seems exaggerated or skewed and the net per person is clearly an absurd metric because that’s not actually how life works. For instance single dude has a car and insurance does the family of 4 need to budget 4x the single guy? What about rent? 4x that too? Is there no cost efficiencies with more than one person living together? The obvious answer is yes, plus the 2 kids are a choice. All that aside let’s look at numbers
Single earner outline
50k gross
4315 fed tax
3825 fica
41,500 net or 16.28% effective
Mfj (ignoring any tax benefits for children)
200k gross
30207 fed
11437-15300 in fica(depends on the earnings breakdown)
154-158k net or worst case 22.5% effective
38.5k per person
So mathematically which scenario is better or has more opportunity? The hhld with 41.5 net with a 16% effective rate or the one with 154k and 22.5% effective rate?
If you compare apples to apples, the first 50k is favorably taxed for the married couple because they get taxed at 10% for 20k of it. They also get 2 standards, so even less of the first 50k they earn hits 12%.
I’m not even sure why you have the question of who has more opportunity. It’s almost always easier to be better off the more you make. A couple hitting the 39% marginal rate and pushing their ETR beyond 23% is even better off still.
Paying more tax isn’t a sign of declining living standard, it’s literally designed to be progressive so of course you’re better off as your ETR goes up. The scenario you gave starts off better on the same income footing and gets better off the more they make.
You are the one that says shouldn't be using just Income tax - your statement was
If you read what you quoted I didn’t say we shouldn’t be using just income tax. If you’d like to quote that I’d be happy to review but you are either erroneous or intentionally representing what I said
Quote:
Nearly 50% pay no income tax - so you wanted to look at those other taxes - someone making $50K can owe little in income taxes and little else in the way of taxes to get to your 10% total tax owed - you are falling into the trap that $50K must be all taxable and from wages. There are some that live in locations that have minimal taxes and can result in 10% total tax paid. So using your data - they have $45K disposable.
I’m not falling for anything. I used your response of a 50k single earner and demonstrated with factual data/math how they paid 16%+ in just fed/fica which doesn’t account for many other taxes people pay. Fwiw it was 41k and change not 45k which makes a pretty big difference to those earning 50k
Quote:
On the other hand you want to minimize those other taxes that can drive the taxes to 50% on $200K income - the other taxes such as state and local taxes, property taxes, sales taxes, multiple vehicle taxes, FICA, taxes on utilities, excise taxes, etc.
I didn’t minimize anything. I accounted for fica in both examples so I’m not sure if math is a problem for you or simple comprehension. In both examples state and local taxes, sales tax, property tax etc are ignored but would apply to both. Neither would support your absurd assertion though
Quote:
A family making $200K in NJ in a $1.2M house could be paying 50,200 in FICA and Income tax, 41,500 in property tax according to smartasset.com - that is 91.7K in tax before taking into account sales, vehicles and other taxes. Sales tax on the $108K left is another $7K - so total tax is roughly $98.7K on $200K - or tax paid a little over 49% of income and still not accounting for some other taxes likely put over 50%.
Sorry but someone is moving the goal post to a singular NJ example with a 1.2mm house. Try moving outside your bubble when your original claim was blanket and demonstrably absurd
Quote:
The point was that it is easier to talk about federal tax since other taxes vary greatly by source and locations - someone making much more can end up with very much less in actual money per person.
That wasn’t actually you point when you originally made it. If that was your intention you did a terrible job
Quote:
Your question about a family making $40K is completely based on location
No it isn’t since it’s a federal issue, location doesn’t play into the numbers as the system currently works
Quote:
- a family making $40K is not normally paying any federal income tax or even much of FICA since EITC is designed to rebate much of FICA for low earners. In addition, child care credits and other items like that are likely giving them a refund more than what was collected. If they are living in a low tax state (or even in higher tax states), their total tax paid could be negative once take into account other benefits such as subsidized housing, TANF, SNAP or similar. A family of 4 making $40K could be getting over $10K per person.
And yet you still can not answer the original question. If you don’t think they pay enough, how much should they pay? I mean if they get a ton of tax credits and have 12-15k per person(because income per person is the measure right?) they should be able to pay how much?
If you compare apples to apples, the first 50k is favorably taxed for the married couple because they get taxed at 10% for 20k of it. They also get 2 standards, so even less of the first 50k they earn hits 12%.
I’m not even sure why you have the question of who has more opportunity. It’s almost always easier to be better off the more you make. A couple hitting the 39% marginal rate and pushing their ETR beyond 23% is even better off still.
Paying more tax isn’t a sign of declining living standard, it’s literally designed to be progressive so of course you’re better off as your ETR goes up. The scenario you gave starts off better on the same income footing and gets better off the more they make.
If you read what you quoted I didn’t say we shouldn’t be using just income tax. If you’d like to quote that I’d be happy to review but you are either erroneous or intentionally representing what I said
Where did I say anything different - I used your quote exactly as written - yet your response seems to focus only on that - not the other taxes such as state, local, sales, property and other taxes.
Quote:
I’m not falling for anything. I used your response of a 50k single earner and demonstrated with factual data/math how they paid 16%+ in just fed/fica which doesn’t account for many other taxes people pay. Fwiw it was 41k and change not 45k which makes a pretty big difference to those earning 50k
Not true - a single earner does not have to be subject to Income tax or FICA - many state employees pay no FICA and FICA is not paid if income is from investments. In addition someone will owe $0 in federal tax if income is from capital gains or similar sources. I still contend that someone making $50K might owe little in income taxes and little else in the way of other taxes to get to your 10% total tax owed - you are still falling into the trap that $50K must be all taxable and from wages in saying that 16%+ in Tax/FICA. FWIW - the 10% was from your post.
Quote:
I didn’t minimize anything. I accounted for fica in both examples so I’m not sure if math is a problem for you or simple comprehension. In both examples state and local taxes, sales tax, property tax etc are ignored but would apply to both. Neither would support your absurd assertion though
I accounted for all taxes in both - that was in the 10% that was your figure and in the total of 50% - the 10% in total tax is a feasible for someone making $50K - comprehension seems to be your issue.
Quote:
Sorry but someone is moving the goal post to a singular NJ example with a 1.2mm house. Try moving outside your bubble when your original claim was blanket and demonstrably absurd
It is not absurd to show that someone making $200K can be paying 50% as tax - 1.2M is a reasonable cost in some areas in NJ and property tax is a tax. My exact statement was "A single guy making $50k might pay 10% in taxes, a couple with 2 kids making $200K (same $50k per person) might pay 50% in taxes - in no way was that a blanket statement.
Quote:
No it isn’t since it’s a federal issue, location doesn’t play into the numbers as the system currently works
Location is very different as far as total taxes paid - and YOUR statement was to NOT only look at income tax - or did you forget.
Maybe you meant to only use Fed income tax and FICA but taxes from all sources was implied by saying not just Fed tax. If that is the case, many pay no FICA so that is again is based on situations and many poor essentially do not pay it either because of EITC giving most back.
Quote:
And yet you still can not answer the original question. If you don’t think they pay enough, how much should they pay? I mean if they get a ton of tax credits and have 12-15k per person(because income per person is the measure right?) they should be able to pay how much?
I did answer the original question - the family is likely paying NO tax in most places. They are paying zero, and often getting some back so they are NOT paying any tax so the question is not relevant as far as I am concerned. I really don't care if they pay anything - they are working so I am good with that.
Where did I say anything different - I used your quote exactly as written - yet your response seems to focus only on that - not the other taxes such as state, local, sales, property and other taxes.
There are far too many variable to include all state and local taxes so the examples are much easier to break down on a federal level
Quote:
Not true - a single earner does not have to be subject to Income tax or FICA - many state employees pay no FICA and FICA is not paid if income is from investments. In addition someone will owe $0 in federal tax if income is from capital gains or similar sources. I still contend that someone making $50K might owe little in income taxes and little else in the way of other taxes to get to your 10% total tax owed - you are still falling into the trap that $50K must be all taxable and from wages in saying that 16%+ in Tax/FICA.
Simply deflection on your part. Plenty of 50k earners are paying 16% in fed/fica. I did the simple math for you
Quote:
FWIW - the 10% was from your post.
That’s was part of a simple question assuming one paid no income tax
Quote:
I accounted for all taxes in both - that was in the 10% that was your figure and in the total of 50% - the 10% in total tax is a feasible for someone making $50K - comprehension seems to be your issue.
I don’t have a comprehension issue. Your example was absurdly exaggerated and I did the math to show you simply on a fed/fica bases how off you were on a very simple scenario
[qiote]It is not absurd to show that someone making $200K can be paying 50% as tax - 1.2M is a reasonable cost in some areas in NJ and property tax is a tax. My exact statement was "A single guy making $50k might pay 10% in taxes, a couple with 2 kids making $200K (same $50k per person) might pay 50% in taxes - in no way was that a blanket statement.[/quote]
It was an absurd example more so because you broke it down to net income per person and also many 200k earners aren’t paying anywhere near 50%
Quote:
Location is very different as far as total taxes paid - and YOUR statement was to NOT only look at income tax - or did you forget.
Maybe you meant to only use Fed income tax and FICA but taxes from all sources was implied by saying not just Fed tax. If that is the case, many pay no FICA so that is again is based on situations and many poor essentially do not pay it either because of EITC giving most back.
My question about the 40k hhld wasn’t about location if was a general question and that seems rather obvious. Most people with earned income are paying FICA so you keep saying some don’t really is irrelevant to a broad discussion.
Quote:
I did answer the original question - the family is likely paying NO tax in most places. They are paying zero, and often getting some back so they are NOT paying any tax so the question is not relevant as far as I am concerned. I really don't care if they pay anything - they are working so I am good with that.
It’s unlikely a hhld is paying no taxes whatsoever
Retirees MFJ. Husband dies. Income of pension and SS substantially unchanged to widow.
Widow files Single. Standard deduction of $12,400 vs. MFJ deduction of $24,800 applied against same income. Taxes skyrocket. Medicare premiums increase because of IRRMA as a Single filer.
Mortgage didn't decrease because husband died. Real estate taxes didn't decrease because husband died. Car payments didn't decrease because husband died. Cost of maintaining house didn't decrease because husband died. In fact it increased because widow can't do everything husband did.
There are far too many variable to include all state and local taxes so the examples are much easier to break down on a federal level
You can't have it both ways - when you say not just Federal Income, it opens it up to including ALL other taxes - otherwise it is just a partial account. Including FICA also distorts because almost half don't pay standard FICA.
I already showed that to include FICA as only tax for low tax payers is incorrect - low income tax payers are getting most or all of that that back as EITC and in addition get other money back such as assistance and child credits.
In addition, there are a lot of people that don't pay FICA such as retirees, people that make money through investments and state employees and then some pay 2x standard FICA as independent contractors and business owners.
Quote:
Simply deflection on your part. Plenty of 50k earners are paying 16% in fed/fica. I did the simple math for you
Again, not simple deflection - many don't pay FICA and many at $50K get some of that back - to include that as if all do is incorrect.
Quote:
That’s was part of a simple question assuming one paid no income tax
I showed that was an oversimplification - they are paying other taxes - if they were paying no income tax and paying 10%, it has to include other taxes because FICA can NOT be more that 7.65%.
Quote:
I don’t have a comprehension issue. Your example was absurdly exaggerated and I did the math to show you simply on a fed/fica bases how off you were on a very simple scenario
It was meant to be a realistic maximum. You did not lay out anything except a low income person paying no income tax yet paying 10% in total tax that is only from paying 100% from FICA - that is impossible to do - FICA is less than that and to get zero income tax, many are getting EITC.
Quote:
It was an absurd example more so because you broke it down to net income per person and also many 200k earners aren’t paying anywhere near 50%
Again - to say more than Income tax, you should include ALL taxes - someone at $200K CAN be paying 50% in taxes which I showed. Some do in fact pay over 50% in taxes and don't have to be that high an earner - you just don't like that fact.
Quote:
My question about the 40k hhld wasn’t about location if was a general question and that seems rather obvious. Most people with earned income are paying FICA so you keep saying some don’t really is irrelevant to a broad discussion.
I answered several times - I said I don't care - them paying zero was OK. You keep wanting a different answer but that is MY answer. What do YOU think it should be - you have yet to answer.
It amuses me how, with extreme wealth and income inequality, people are surprised most taxes are collected from the top 10% and 1%.
Hello McFly!
The rest of the people don't have anything significant to tax. The poor & working classes have meagre wages and are probably in debt. They have nothing to tax. The middle classes have their incomes, their job benefits, their houses, and that's it. If you tax those too heavily you screw over the entire economy because it's 70% services, and the middle class are the ones doing the buying of them.
You can't have it both ways - when you say not just Federal Income, it opens it up to including ALL other taxes - otherwise it is just a partial account.Including FICA also distorts because almost half don't pay standard FICA.
I’m not trying to have it both ways but on a broad discussion it’s icy easier to breakdown numbers on a federal level because of variables. This should be obvious. Do you have anything to back up 50% don’t pay fica?
Quote:
I already showed that to include FICA as only tax for low tax payers is incorrect - low income tax payers are getting most or all of that that back as EITC and in addition get other money back such as assistance and child credits.
No actual source or data here
Quote:
In addition, there are a lot of people that don't pay FICA such as retirees, people that make money through investments and state employees and then some pay 2x standard FICA as independent contractors and business owners.
I didn’t know the conversation was just above retirees or state employees. Those paying 2x fica arena excluded from the discussion
Quote:
Again, not simple deflection - many don't pay FICA and many at $50K get some of that back - to include that as if all do is incorrect.
You made the example of a 50k single person vs a 200k family of four. Shows me with math where the 50k single person is getting something back. I showed you simple math to get you to 16% in taxes
Quote:
I showed that was an oversimplification - they are paying other taxes - if they were paying no income tax and paying 10%, it has to include other taxes because FICA can NOT be more that 7.65%.
And that was part of my original question
Quote:
It was meant to be a realistic maximum. You did not lay out anything except a low income person paying no income tax yet paying 10% in total tax that is only from paying 100% from FICA - that is impossible to do - FICA is less than that and to get zero income tax, many are getting EITC.
Your example wasn’t a realistic maximum. It was a false premise from the start as a single person making 50k isn’t going to being paying a max of 10%. I showed you the simple math that shows a minimum of 16% hours ignoring all other taxes outside of fed income/fica. You repeating nonsense doesn’t make it true
Quote:
Again - to say more than Income tax, you should include ALL taxes - someone at $200K CAN be paying 50% in taxes which I showed. Some do in fact pay over 50% in taxes and don't have to be that high an earner - you just don't like that fact.
Could pay more than 50% possibly but not likely, certainly not the majority of 200k 4 personal hhld. Conversely most single earner HHLDs aren’t topping out at 10% despite your repeated claim, thus your initial statement was imo exaggerated
Quote:
I answered several times - I said I don't care - them paying zero was OK. You keep wanting a different answer but that is MY answer. What do YOU think it should be - you have yet to answer.
I wasn’t asking for you take again but simply explaining what the original question was because you seem to struggle with it. I don’t have any issue with hhlds making under 50k paying 0 across the board
Paying more tax isn’t a sign of declining living standard, it’s literally designed to be progressive so of course you’re better off as your ETR goes up.
The problem with income taxation is it literally provides a disincentive to contribute to society & the economy.
The problem with progressive income taxes is it provides severe disincentives to contribute more to society. Why go the extra mile when at the margin the Federal Government taxes away most of an extra dollar of income? Many couples do the math and decide one spouse's incremental contribution to family income, after high marginal income taxes, is so small that they make the decision to be a single-earner family. That's an entire person's economic contribution is foregone that, absent the progressive income tax, would have occurred thus making everyone better off.
Taxing income is a bad idea for that reason.
There are many other taxation schemes that
raise the requisite money to fund our governments
do not have the negative aspects of a progressive income tax
while not taxing income, are as progressive as needed to satisfy the bed-wetting SJWs
Last edited by RationalExpectations; 03-05-2021 at 09:27 AM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
