Annoying: People making 100k worrying about taxes on those making 100k

[Thorgrim]

I know several people making 100k, and some even making 250k, (anything over that, I don't know as a friend)

So many of them fret "oh gee, I make 105k, they might raise taxes on those making over 100k! I'm so screwed, they don't realize 105k isn't what it used to be!"

Have these people ever done their own taxes, I mean I know this is common sense here, but after deductions, exceptions...especially if you have kids or a new house...that 105k person probably only has 80k or less in taxable income...thus any raise on 100k income taxes is meaningless...same to those who barely make over 250k a year and are worried...

Politicians never mention this because it would take a good minute to explain it everytime, it's much easier to say "no new taxes to anyone less than 250k" than to explain they're making a system where no one who is upper middle class is going to get hurt

[Publius]

Not to mention the fact that our tax system is set up so that you always pay below your bracket's actual % because of the graduated nature.

I don't know the exact figures off the top of my head, so let's make up a schedule.

Say you make 105k, your taxes would break down as:

$0-$10,000 - 0%
$10k-$40k - 15%
$40k-$100k - 25%
$100k-$105k - 30%

So you're only paying your "tax rate" on the last 5k, and even with zero deductions your total tax bill would be about 20% of your income, not 30%.

For once I agree with you.

[Ardentfrost]

Yeah, but breaking into the next bracket allows you to see little change for a while. Though, I agree that someone who makes 105k isn't going to be in the 100+ bracket.

I worry, though, b/c my wife and I combine to get really close to that 100k bracket... we're probably not far off from being in there, so *I* don't want higher taxes, I already pay too much! If we do get there I'll need to roll some out into an IRA or something.

Stupid taxes

[Ardentfrost]

Oh, I forgot the married fliing jointly rates are adjusted. We're still ok for a while longer

[bheld]

Originally Posted by Ardentfrost

Yeah, but breaking into the next bracket allows you to see little change for a while. Though, I agree that someone who makes 105k isn't going to be in the 100+ bracket.

I worry, though, b/c my wife and I combine to get really close to that 100k bracket... we're probably not far off from being in there, so *I* don't want higher taxes, I already pay too much! If we do get there I'll need to roll some out into an IRA or something.

Stupid taxes

What Publius was getting at is that there's no such thing as getting "pushed" into a higher tax bracket where your total income is exposed to a higher rate. Once you hit that $100,000 bracket by making, say $105,000, only $5000 of that would be taxed at the higher rate. So it's not like you're seeing "little change," you just might pay a few extra hundred bucks.

[Ardentfrost]

Originally Posted by bheld

What Publius was getting at is that there's no such thing as getting "pushed" into a higher tax bracket where your total income is exposed to a higher rate. Once you hit that $100,000 bracket by making, say $105,000, only $5000 of that would be taxed at the higher rate. So it's not like you're seeing "little change," you just might pay a few extra hundred bucks.

That "few extra hundred bucks" represents little change. If you get a raise at work and accept more responsibility, and they give you an extra $5k/year but it pushes you into a higher tax bracket, but then after taxes your total income hasn't changed a lot but you're stuck with all this extra responsibility at work....

See where that goes? I've known my share of people to turn down promotions because of taxes.

[Thorgrim]

Publius made a good ADDITION but you guys are missing the point, Arden, you say you're close to 100,000 filing jointly, but please, tell us how much REPORTED TAXABLE INCOME you file to the IRS? I imagine you're not in any danger of having your REPORTED TAXABLE INCOME hit the six figures...in the near and medium future

If you're gross income is $2908349732048230984 but your reported taxable income is $99,999, it doesn't matter at all if they raised taxes on those making over $100,000 to 90%...you'll still be paying the same rate because you don't have one dollar that actually goes over $100,000

[Thorgrim]

Originally Posted by Ardentfrost

That "few extra hundred bucks" represents little change. If you get a raise at work and accept more responsibility, and they give you an extra $5k/year but it pushes you into a higher tax bracket, but then after taxes your total income hasn't changed a lot but you're stuck with all this extra responsibility at work....

See where that goes? I've known my share of people to turn down promotions because of taxes.

That's incredibly stupid on so many levels, I'm sure if they knew how to work their taxes and a basic calculator, they'd realize:
A) Their raise was insignificant compared to work demanded, regardless of what the tax rate was
B) Their raise was significant and was much more important than the new responsibility, before taxes are taken into account...once they sit down and do tax planning, they find out they'll gain much more than their misconceptions had them believe and the decision comes all down to "do i want the work" rather than anything about taxes

[Simius]

Originally Posted by Thorgrim

That's incredibly stupid on so many levels, I'm sure if they knew how to work their taxes and a basic calculator, they'd realize:
A) Their raise was insignificant compared to work demanded, regardless of what the tax rate was
B) Their raise was significant and was much more important than the new responsibility, before taxes are taken into account...once they sit down and do tax planning, they find out they'll gain much more than their misconceptions had them believe and the decision comes all down to "do i want the work" rather than anything about taxes

That would be the rational reasons why someone would turn down the raise.

But some people are just plain stupid. I've had two different co-workers in two different jobs turn down significant bonuses because it would bump them into the next tax bracket and they thought they'd receive less net pay after taxes. This is a bonus mind you... they had no extra work, they had already done the extra work for that money.

I'd tell them to read Publius's post... but I don't think they'd understand it anyway.

[Thorgrim]

Originally Posted by Simius

That would be the rational reasons why someone would turn down the raise.

But some people are just plain stupid. I've had two different co-workers in two different jobs turn down significant bonuses because it would bump them into the next tax bracket and they thought they'd receive less net pay after taxes. This is a bonus mind you... they had no extra work, they had already done the extra work for that money.

I'd tell them to read Publius's post... but I don't think they'd understand it anyway.

It's so simple though, I can see why people might take a few run throughs to understand my post, but Publius's post and point are so simple...it's ridiculous

[WickedLou9]

Originally Posted by Ardentfrost

That "few extra hundred bucks" represents little change. If you get a raise at work and accept more responsibility, and they give you an extra $5k/year but it pushes you into a higher tax bracket, but then after taxes your total income hasn't changed a lot but you're stuck with all this extra responsibility at work....

See where that goes? I've known my share of people to turn down promotions because of taxes.

5% of 5,000 divided over 12 months.
If you get paid every 2 weeks thats 10 dollars more in taxes each paycheck that you are paying because of the rate increase. if say you got your 5000 dollar raise that means you are seeing an extra 200 dollars per pay period and the higher bracket only means that you are paying an extra 10 dollars thatn you would have had the rate stayed the same. It's not significant.

[6SpeedTA95]

Originally Posted by Thorgrim

I know several people making 100k, and some even making 250k, (anything over that, I don't know as a friend)

So many of them fret "oh gee, I make 105k, they might raise taxes on those making over 100k! I'm so screwed, they don't realize 105k isn't what it used to be!"

Have these people ever done their own taxes, I mean I know this is common sense here, but after deductions, exceptions...especially if you have kids or a new house...that 105k person probably only has 80k or less in taxable income...thus any raise on 100k income taxes is meaningless...same to those who barely make over 250k a year and are worried...

Politicians never mention this because it would take a good minute to explain it everytime, it's much easier to say "no new taxes to anyone less than 250k" than to explain they're making a system where no one who is upper middle class is going to get hurt

It's their money not the governments, thats the problem. This is the single biggest flaw in the democrat/liberal argument IMO. They are ALL about personal freedoms and social freedom and in many cases they're right! But when it comes to my freedom to spend my money, we'll let the government do that. Makes zero sense and is completely hypocritical and yes republicans have plenty of their own issues in which they behave the same way.

[Ardentfrost]

Originally Posted by WickedLou9

5% of 5,000 divided over 12 months.
If you get paid every 2 weeks thats 10 dollars more in taxes each paycheck that you are paying because of the rate increase. if say you got your 5000 dollar raise that means you are seeing an extra 200 dollars per pay period and the higher bracket only means that you are paying an extra 10 dollars thatn you would have had the rate stayed the same. It's not significant.

It's an opportunity cost thing. if you're at 99,999 and you get offered an additional responsibility for 5001 raise, you are then making 105000. Your raise is actually not $5k, but 72% of 5k or 3600. If the thing you've been offered to add on isn't worth 3600 to you, then the 5k raise isn't viable.

That is, of course, only considering taxable income.

Also it doesn't account for the 9% social security, state taxes, etc...

[6SpeedTA95]

Originally Posted by Ardentfrost

It's an opportunity cost thing. if you're at 99,999 and you get offered an additional responsibility for 5001 raise, you are then making 105000. Your raise is actually not $5k, but 72% of 5k or 3600. If the thing you've been offered to add on isn't worth 3600 to you, then the 5k raise isn't viable.

That is, of course, only considering taxable income.

Also it doesn't account for the 9% social security, state taxes, etc...

Lets be realistic here. Add in social security and state/local taxes and you're closer to having a raise worth 55% of what it really is.

This doesn't account for gas taxes, postage stamps, state and local sales taxes, all of which eat up another 10 to 15% of one's disposable income.

[Thorgrim]

Originally Posted by Ardentfrost

It's an opportunity cost thing. if you're at 99,999 and you get offered an additional responsibility for 5001 raise, you are then making 105000. Your raise is actually not $5k, but 72% of 5k or 3600. If the thing you've been offered to add on isn't worth 3600 to you, then the 5k raise isn't viable.

That is, of course, only considering taxable income.

Also it doesn't account for the 9% social security, state taxes, etc...

yes...but what about going from 94,999 to 99,999....your numbers work out basically the same but the person hasn't moved in the tax bracket at all...you're just applying the taxes and going "gee is it worth it?" but in that case no one should ever take a raise or make more money, yet all the smart people do it

to me, this is just people who are lazy and looking for an excuse "oh taxes, not worth it" when it's really "oh man, that's 2 hours less of world of warcraft, fuck that!"

[hsmith]

When all is said and done, I effectively am taxed at 42.5% a year. Which doesn't include sales taxes. Add that, and it is probably around 50%.

That is really fair

I am a slave for 5 months out of the year and all I get in return are roads, which I pay for with gas taxes anyway.

For the betterment of everyone, right

[Thorgrim]

Originally Posted by 6SpeedTA95

Lets be realistic here. Add in social security and state/local taxes and you're closer to having a raise worth 55% of what it really is.

This doesn't account for gas taxes, postage stamps, state and local sales taxes, all of which eat up another 10 to 15% of one's disposable income.

gas taxes affect you when you get a raise that doesn't involve travel? what?

Local taxes are deductible, BTW

[Thorgrim]

Originally Posted by hsmith

When all is said and done, I effectively am taxed at 42.5% a year. Which doesn't include sales taxes. Add that, and it is probably around 50%.

That is really fair

I am a slave for 5 months out of the year and all I get in return are roads, which I pay for with gas taxes anyway.

For the betterment of everyone, right

you could always move to some country with basically no income tax, since apparently the US has never done anything to help you get where you are nor has it ever helped your business in anyway whatsoever, I am sure you would thrive if you moved to Somalia

are your bags packed yet? I didn't think so

[thewise1]

if you don't love it, leave it?