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A childless full time minimum wage worker pays over $500 a year in federal income tax, plus over $1000 in payroll taxes, with no tax credits available.
Quote:
Originally Posted by hnsq
That isn't true at all. If you are paying taxes, then you will get them all back at the end of the year. Change your withholding status. The person in the lowest quintile (less than $14.5k per year) is actually paid by the government. Are you really complaining about having a negative effective tax rate?
That graph isn't accurate unless it is taking the average and I believe it is. My effective tax rate for all taxes was over 20% and over 14% for income taxes and I am not in the top quintile.
That graph isn't accurate unless it is taking the average and I believe it is. My effective tax rate for all taxes was over 20% and over 14% for all taxes and I am not in the top quartile.
It is average. I personally have a hard time seeing how anyone that puts a good weekend into tax planning every year can have an effective rate that high. I have never paid more than 10% as an effective rate in my life, and all I do is spend a few days every year researching tax law.
It is average. I personally have a hard time seeing how anyone that puts a good weekend into tax planning every year can have an effective rate that high. I have never paid more than 10% as an effective rate in my life, and all I do is spend a few days every year researching tax law.
It might be worth it to look into starting a side business. You can incorporate an LLC for a few hundred dollars. Turn a hobby that you do around the house into a small business to create day to day deductions.
It might be worth it to look into starting a side business. You can incorporate an LLC for a few hundred dollars. Turn a hobby that you do around the house into a small business to create day to day deductions.
The wealthy do it, why can't we?
Not a bad idea, and it can be done. The problem is that when you turn a hobby into a business, it is no longer a hobby. It becomes work. However, if you love your work, you have the best of both worlds.
That isn't true at all. If you are paying taxes, then you will get them all back at the end of the year. Change your withholding status. The person in the lowest quintile (less than $14.5k per year) is actually paid by the government. Are you really complaining about having a negative effective tax rate?
SIGH SIGH SIGH
the numbers you cite are skewed by families with children.
Childless adults working full time at minimum wage are net taxpayers:
Income = 7.25 * 2000 hrs = $14,500
Standard deduction 2012 = $5,950
Personal exemption 2012 = $3,800
Taxable income = 14,500 - 5,950 - 3,800 = $4,750
Income tax = $4,750 * .10 = $475
Payroll taxes = $14,500 * .0765 = $1109
EITC = $0
Income tax = $475
(2011 income tax was over $500, bracket indexing dropped his 2012 taxes to $475.)
^ Let's not forget that sales tax isn't deductible under most circumstances. Neither is the real estate tax that is fixed into a poor person's rent. (Unlike that interest on mortgages that us "well-to-do" folks enjoy.)
^ Let's not forget that sales tax isn't deductible under most circumstances. Neither is the real estate tax that is fixed into a poor person's rent. (Unlike that interest on mortgages that us "well-to-do" folks enjoy.)
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However, if you love your work, you have the best of both worlds.
