Published On #FITSO Motivation

Let’s Talk About Tax Brackets

Since some people (read: conservatives) are freaking out over the idea of TaXiNg RiCh PeOpLe, let’s talk about tax brackets.

Currently, we have seven tax brackets in the US, at rates between 10% and 37%. All income over $500,000 – whether that’s $500,001 or $1 billion – is taxed, at most, at 37%. What Alexandria Ocasio-Cortez has proposed is increasing the tax bracket so that people who are very rich and making millions of dollars a year would pay a higher tax bracket (70%).

The response is, basically, “But what if I suddenly get ten million dollars? Then I’ll have to pay 70% of my millions! That’ll make me worse off than if I merely had nine million!”

This comes up in shit around taxes a lot (”Don’t get a raise, you’ll have a higher tax bracket!”), so let’s address this using simple math.

Pretend that tax bracket goes like this: if you make $15 or less, you pay no taxes. If you make $16-30 dollars, they take away 10%. If you make $31-45, they take away 15%. At $46 or more, they take away 20%.

That doesn’t mean that if you make $16, you have that 10% taken from the total income. You don’t get $1.60 taken away from you. You have that 10% taken from every dollar you make over $15. In this case, only $1 is over $15, so only that dollar gets 10% taken out of it (and you lose $0.10). The rest of the money is taxed at the lower rate (which in this case is 0%).

Say that you make $42, so you’re taxed at 15%. So that means that every year, you pay $6.30, right? 

No. You pay:

Nothing on the first $15 (0% of 15 is $0), plus

10% on all the money between $16 and $30 (10% of 15 is $1.50), plus

15% on all the money between $31 and 42 (15% of 12 is $1.80)

So actually you’re only paying $3.30. You have $38.70 left over.

Now you get a raise. You make $50, which pushes you into the next highest tax bracket. Oh, no, that means that they'll take away 20% of your $50, so you’ll have to spend a whole $10!

No. Let’s do the math again.

You pay:

Nothing on the first $15 (0% of 15 is $0), plus

10% on all the money between $16 and $30 (10% of 15 is $1.50), plus

15% on all the money between $31 and $45 (15% of 15 is $2.25), plus

20% on all the money over $45 (20% of $5 is $1)

So actually, you’re only paying $4.75. You have $45.25 left over.

So if there’s a 70% tax bracket on, say, 10 million dollars or more, it doesn’t mean that the second you make 10 million (something that almost no one in this country makes to begin with), you start getting taxed at 70% and they take away 7 million. The first $9,999,999 are still taxed in the lower brackets. They just take away 70 cents from the ten millionth dollar.

“Give me five minutes to explain taxes to you: The top marginal tax rate is currently 39.6 percent, which remember, is an altogether different thing from the effective tax rate that wealthy people end up actually paying after taking advantage of various tax loopholes. What does that even mean - a ‘marginal tax’ rate of 39.6 percent? Does it mean the average person pays 39.6% in taxes? No. Does it mean that the income earners in the top one percent pays 39.6% in taxes? NO! Here’s what a marginal tax rate of 39.6% means: First, as of 2013 the top tax rate for individuals currently doesn’t begin unless you earn $406,750 dollars. Actually, that tax rate doesn’t even take effect until you make $406,750 + $1 dollar. Got that part? That’s important. Here’s the tricky detail that most people miss: the 39.6% tax rate is only applicable on anything OVER $406,750 dollars. So if you made $406,752 dollars, then only two ($2) of those dollars will be taxed at the highest rate of 39.6%…and the other $406,750 is not. Of course, this does not take into account the numerous tax loopholes that I alluded to earlier. Thus, if the top marginal tax rate is 39.6 percent, then after using any number of tax loopholes, write offs and various other cheats, it’s entirely possible earn over $406,750 dollars per year and still pay even less in taxes than a working class American earning much less. SN: this applies only to people who do actual work for a paycheck. If, on the other hand, your primary income is from inheritance or stock investments and you pay all your bills off of that interest (aka “capital gains”), then your taxes work differently altogether (hint: they’re even lower). Take multi-billionaire Mitt Romney, for example. In 2010 he only paid an effective (real) tax rate of 13.9 percent, odds are that’s much lower than the tax rate you (or your parents) just paid. Here’s the last thing you should remember: Only one percent of Americans make $400,750 a year or higher. Stated differently, the top income tax rate effects around 3.5 million —out of 350,000,000 Americans. And that’s only on the dollars ABOVE $400,750. BOO HOO right? Approximately 3.5 million Americans might, maybe, perhaps *possibly* have to pay the top federal income tax rate…but only on anything above $406,750 dollars…and only if they refuse to take advantage of ridiculously huge tax loopholes so big you could fly a jumbo jet through them. THAT is what conservatives are crying about when they complain about the top tax rate. That’s it.”

— This is why whining about the top tax rate is a joke and Republicans are the party for the Greedy One Percent (and the deluded suckers “future millionaires“ who repeatedly vote for them)

Personal growth becomes so addictive once you realize that it’s always possible to improve your experience of being.

The mind is a powerful Creator.

“To be fully alive, fully human, and completely awake is to be continually thrown out of the nest. To live fully is to be always in no-man’s-land, to experience each moment as completely new and fresh. To live is to be willing to die over and over again.”

— Pema Chödrön 

Centaurus A or NGC 5128 is a galaxy in the constellation of Centaurus.

The center of the galaxy contains a supermassive black hole with a mass equivalent to 55 million solar masses, which ejects a relativistic jet that is responsible for emissions in the X-ray and radio wavelengths. By taking radio observations of the jet separated by a decade, astronomers have determined that the inner parts of the jet are moving at about half of the speed of light. X-rays are produced farther out as the jet collides with surrounding gases resulting in the creation of highly energetic particles. The X-ray jets of Centaurus A are thousands of light-years long, while the radio jets are over a million light-years long

Image credit: ESO/ESA/NASA & Hubble