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>And at the high end in California (San Francisco), someone might pay 51.9% income tax and 8.75% in sales tax. What you're talking about is the marginal tax ra
by rm999 10y ago
>And at the high end in California (San Francisco), someone might pay 51.9% income tax and 8.75% in sales tax.
What you're talking about is the marginal tax rate, i.e. the limit as income -> infinity, but it's typically much much lower than this (even for the wealthy). Most people pay in the 10-20% range for federal income taxes. Millionares pay in this range too for several reasons, capital gains and write-offs.
The blue line on this plot shows the effective federal income tax: https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#/media/File:U.S._Federal_Income_Tax_Rates_2013.png https://en.wikipedia.org/wiki/Income_tax_in_the_United_State....
- loeg 10y ago> What you're talking about is the marginal tax rate Yes, this whole comment thread has been discussing marginal rates. I thought that was clear from mentioning tax brackets in both my comment and refurb's grandparent comment, which mine is in comparison to. I've edited the comment to be really clear that this is not an average rate. Edit: Whoops, and I left out FICA taxes and it's too late to edit the above comment again. That adds another 7.65% (W-2), up to $118,500; 1.45% above that, and a little more at the top rate.
- deleted 10y ago[deleted]
- graeme 10y agoThe thread is about marginal rates. My actual average tax rate right now in Quebec is a bit over 30%
- loeg 10y agoRight. My marginal rate in the US is 29-35% (with Medicare tax/surtax) but my average rate is more like 21%.
- rm999 10y agoI see... I guess I'll just point out what you may already know: the way you guys are framing this discussion is really flawed. Marginal rates have no meaning without discussing brackets (and other important details), which can be quite different in different countries. Effective tax rate distributions are the only meaningful way to compare different countries' rates. As an analogy, it would be like comparing Buffalo's weather to San Diego's based on the average high temperature in the summer (which may lead you to believe Buffalo is hotter than San Diego).
- graeme 10y agoTrue. I hadn't realized how much higher the top us brackets are compared to Canada. Higher income levels that is.