A Tax Payer Revolt Is Long Overdue!

[caryalsobrook]

I (I mean our accountant) must be doing something wrong because I pay a lot more than what is indicated here. I think that last year I paid in excess of a 20% effective rate, which means more than 20% of my total gross. Effective rate is what I think the IRS is talking about here. When JS refers to the 30% and 15% rates, I have to believe that those are marginal rates.

I realize you know the difference, but when I hear discussions about taxes, it is clear that most people don't seem to understand the difference between effective rates and marginal rates.

You are so right. He quoted the marginal rate for the lower incomes and effective rate for the higher income. That is done many times and is so misleading.

[JS]

You are so right. He quoted the marginal rate for the lower incomes and effective rate for the higher income. That is done many times and is so misleading

Well, I am not a tax accountant so I could certainly be doing something wrong! . No attempt to mislead, I promise.

But the site I cited ($2 words here) referenced the marginal rate in both cases. In 1985 there are only 6 tax brackets, but in 2011 there are 15 so the dollar numbers are not the same but I did my best to find comparable numbers to compare rates.

And I do realize the $25,000 guy in 1985 is probably earning more doing the same work in 2011 and I did not make any attempt to adjust $25,000 to today's figure. I thought we could all understand that my examples were to demonstrate a principle, not fill out a tax return. Another frustrating danger in trying to be brief. My bad.

So the principle is that if circumstances in your life remained the same and your earnings (buying power) kept pace with inflation, and we are talking about earned income, not capital gains, etc., etc., etc. ... keeping everything as constant as possible ... the % of your earnings that go to pay federal taxes is less today than in 1985. I could be wrong. So, using the charts in the link I provided, please show me the error of my ways.

(You did find how to scroll down to past years in that chart, right? There is a separate scroll bar on the righthand edge of the chart.)

JS

[caryalsobrook]

Well, I am not a tax accountant so I could certainly be doing something wrong! . No attempt to mislead, I promise.

But the site I cited ($2 words here) referenced the marginal rate in both cases. In 1985 there are only 6 tax brackets, but in 2011 there are 15 so the dollar numbers are not the same but I did my best to find comparable numbers to compare rates.

And I do realize the $25,000 guy in 1985 is probably earning more doing the same work in 2011 and I did not make any attempt to adjust $25,000 to today's figure. I thought we could all understand that my examples were to demonstrate a principle, not fill out a tax return. Another frustrating danger in trying to be brief. My bad.

So the principle is that if circumstances in your life remained the same and your earnings (buying power) kept pace with inflation, and we are talking about earned income, not capital gains, etc., etc., etc. ... keeping everything as constant as possible ... the % of your earnings that go to pay federal taxes is less today than in 1985. I could be wrong. So, using the charts in the link I provided, please show me the error of my ways.

(You did find how to scroll down to past years in that chart, right? There is a separate scroll bar on the righthand edge of the chart.)

JS

Just went back and looked at the chart to see what it was. It does show the marginal tax rates for the years that you mention. However when you quoted the 13% rate, you were actually quoting the EFFECTIVE TAX RATE. If you looked up effective tax rates for those very levels you quoted, you would find those tax rates much lower than 13%. As I said you were comparing apples to oranges.

One of the few things I know about computers is the scroll tab. Can't copy, paste, download videos and don't want to take the time to learn. Just let my son and friends do that for me. Much rather clean kennels feed dogs and puppies, and train them. If you think I am a computer illiterate, you would be right. However I like to think that is by choice and not due to intellect.