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<p>[QUOTE=&quot;-jeffB, post: 2067477, member: 27832&quot;]Ugh. Now, see, Chris, I&#039;m one of your biggest fans in nearly every area here, but this is <i>exactly</i> the kind of argument I was complaining about.</p><p><br /></p><p>First, as best I can tell, FICA is now 6.2%. It used to be 7.5%. But it only gets withheld on the first $118.5K.</p><p><br /></p><p>If you&#039;re in the 33% bracket, you&#039;re making at least $189K. That means your actual FICA percentage is a good bit lower -- closer to 3.9% each for you and your employer. The more you make, the lower that percentage gets.</p><p><br /></p><p>And 33% is your <i>marginal</i> rate -- you only pay that on the amount you earn over $189K. If you earn exactly $189,301 (by the chart above), you pay $46,075.25 to the Feds -- that works out to a bit over 24%.</p><p><br /></p><p>State tax, at least if it works for you the way it works for us, gets charged against your earnings <i>minus</i> Federal taxes. So you aren&#039;t paying 11% on $189,301, you&#039;re paying it on $189,301 - 46,075.25 - 7,347.00 = 143,218.40. 11% of that is $15,754; that&#039;s only 8.3% of your $189,301 gross income.</p><p><br /></p><p>So, at this point, you&#039;ve paid 24% + 3.9% + 8.3% = 36.2% of your income in Federal and state taxes. Property taxes aren&#039;t based on your income, of course, but we&#039;ll assume that they amount to 4.2% of that $189,301. That means you&#039;re down 40.4%, not 62.2%. Even if you double up that FICA number, you&#039;re still under 45%.</p><p><br /></p><p>And if you&#039;re playing in this range, with a solid six-figure income, I have to assume that you&#039;re wise enough to find every tax break that&#039;s available to you, or better yet, hire professionals to do it. Mortgage interest? Retirement contributions? All of those come off the top, <i>before</i> you even determine your bracket.</p><p><br /></p><p>Now, I might have some details wrong here; my wife, for whom I&#039;m thankful every day, takes care of doing our taxes. But the <i>simple addition</i> of <i>marginal</i> rates, coupled with ignoring actual <i>regressive</i> taxes (that cut off <i>above</i> a certain income level), is <i>always</i> going to give artificially inflated rates. It&#039;s misleading, and distracts from the <i>real</i> tax issues.</p><p><br /></p><p>Without venturing into dangerous political waters, I&#039;m going to guess that you and I differ strongly on some of those issues as well. I certainly think that many dollars the government collects get spent on the wrong things, and the ones spent on the right things are often spent inefficiently. But it <i>really</i> bugs me that, in order to figure out the lowest amount of tax you can legally pay, you basically need to be wealthy enough to hire expert consultants. (Actually, it&#039;s worse than that; only the <i>really</i> wealthy get the lowest tax rates of all, by hiring politicians.)[/QUOTE]</p><p><br /></p>

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