4 ms·

The middle class referred to in the article is middle class of US. middle class of the bay area, might be a totally different story. The article is basically

The middle class referred to in the article is middle class of US. middle class of the bay area, might be a totally different story. The article is basically saying, those who aren't paying any income taxes are quite happy with their income tax rate. Meanwhile, anyone who lives in a more expensive part of the country like CA/ Bay area is paying higher taxes: 30%-40% for most people, not counting all the taxes paid on the employers side as well as all the taxes you pay with the remainder of your paycheck. Still, you might think, that's enough to live off. But, if you are working in high tech with a decent salary, you've only got so many years before you get aged out of the work force ~ 50 according to the other article: http://www.businessinsider.com/stressful-lives-of-older-tech-workers-2015-11?_lrsc=e525de47-81f1-48b4-bc62-2a1e336af828 http://www.businessinsider.com/stressful-lives-of-older-tech....

turk184 9y ago
You hit the nail on the head. Also, not only is there an upper age, your salary levels off pretty early in your career and only rises very slowly after that unless you are willing to take on bigger and bigger risks. On top of all that, if, like me, you spent any time in graduate school, there's even fewer years to "make it". It's very frustrating the lies we live with and how much of our income is forfeit in taxes which just ends up in one boondoggle after another or in the perpetual (multi-generational?) war in Afghanistan. It's insane what we put up with and I for one am sick of pretending any of it is worthwhile. We pay too much for defense, we pay too much for entitlements, we have too many federal workers, and most states have too many state, county, and local workers as well, all of which I view as another type of welfare scheme. I'm not saying we need zero government, but the time for government to right-size itself has arrived.
smt88 9y ago
Why is any of that relevant? What percentage of the US do you think lives in the Bay Area? (~2%, if you didn't want to look it up.) Of course there are exceptions to this and any generalization, but that doesn't make this generalization less valid or less interesting.
jogjayr 9y ago
Except that even in the Bay Area you're paying a marginal tax rate of 30-40%, not an effective rate. They're different things. If you're actually paying > 30% effective federal tax rate you'd have to be earning > $600k (assuming married filing jointly)[1]. At that level of income, anywhere in the world at all, getting by and saving for retirement should really not be a problem. 1. http://www.effectivetaxcalculator.com/ http://www.effectivetaxcalculator.com/
- mandelbrotwurst 9y ago
  The federal income tax isn't the only income tax. There are also state, local, FICA, and medicare taxes. Add those in and someone with a $100K salary ends up in that 30-40% range.
  - mikeyouse 9y ago
    Yep, if you file as a single person making $100k with the standard deduction, you'd pay right around 32% in total tax between State, Federal, and FICA. If you're a married couple making the same amount, you'd pay roughly 29%.
    - jogjayr 9y ago
      FICA contributions top out at $127k gross income. Someone earning $300k/year is paying the same amount in FICA as someone earning $127k. Which I actually think is unfair, but that's another topic entirely. The standard deduction isn't the only deduction available. If you're filing as a married couple and maxing out your 401k and/or IRA you're suddenly saving money and gasp down a couple of tax brackets. A married couple making $100k jointly, and both working jobs with benefits, could put away $36k/year in 401k money alone, which is more than enough for a comfortable retirement after 30 years (and I didn't even take into account any potential employer matching). A couple with one earner can save 23.5k (18k + 5.5k traditional IRA). If you pay for health insurance, more deductions. Ditto for FSA benefits. If you have eligible educational expenses (kid in school/college, spouse getting another degree etc), same thing. If you have receive commuter benefits through work (buying a parking or public transit pass)...you guessed it. (weirdly this is the only deduction you can take for FICA, which is otherwise calculated on gross income). If you're itemizing deductions, there's mortgage interest, state tax, property tax, charitable contributions, car registration fees. I'm sure I'm missing more here because I don't itemize. The point I'm making is, no one takes just the standard deduction. If you're going to add all the other taxes in, you really should count all the deductions you can take too. Add all that in and there's no way you should be paying anywhere close to 30%.

turk184 9y ago

You hit the nail on the head. Also, not only is there an upper age, your salary levels off pretty early in your career and only rises very slowly after that unless you are willing to take on bigger and bigger risks. On top of all that, if, like me, you spent any time in graduate school, there's even fewer years to "make it". It's very frustrating the lies we live with and how much of our income is forfeit in taxes which just ends up in one boondoggle after another or in the perpetual (multi-generational?) war in Afghanistan. It's insane what we put up with and I for one am sick of pretending any of it is worthwhile. We pay too much for defense, we pay too much for entitlements, we have too many federal workers, and most states have too many state, county, and local workers as well, all of which I view as another type of welfare scheme. I'm not saying we need zero government, but the time for government to right-size itself has arrived.

smt88 9y ago

Why is any of that relevant? What percentage of the US do you think lives in the Bay Area? (~2%, if you didn't want to look it up.) Of course there are exceptions to this and any generalization, but that doesn't make this generalization less valid or less interesting.

jogjayr 9y ago

Except that even in the Bay Area you're paying a marginal tax rate of 30-40%, not an effective rate. They're different things. If you're actually paying > 30% effective federal tax rate you'd have to be earning > $600k (assuming married filing jointly)[1]. At that level of income, anywhere in the world at all, getting by and saving for retirement should really not be a problem. 1. http://www.effectivetaxcalculator.com/ http://www.effectivetaxcalculator.com/

mandelbrotwurst 9y ago
The federal income tax isn't the only income tax. There are also state, local, FICA, and medicare taxes. Add those in and someone with a $100K salary ends up in that 30-40% range.
- mikeyouse 9y ago
  Yep, if you file as a single person making $100k with the standard deduction, you'd pay right around 32% in total tax between State, Federal, and FICA. If you're a married couple making the same amount, you'd pay roughly 29%.
  - jogjayr 9y ago
    FICA contributions top out at $127k gross income. Someone earning $300k/year is paying the same amount in FICA as someone earning $127k. Which I actually think is unfair, but that's another topic entirely. The standard deduction isn't the only deduction available. If you're filing as a married couple and maxing out your 401k and/or IRA you're suddenly saving money and gasp down a couple of tax brackets. A married couple making $100k jointly, and both working jobs with benefits, could put away $36k/year in 401k money alone, which is more than enough for a comfortable retirement after 30 years (and I didn't even take into account any potential employer matching). A couple with one earner can save 23.5k (18k + 5.5k traditional IRA). If you pay for health insurance, more deductions. Ditto for FSA benefits. If you have eligible educational expenses (kid in school/college, spouse getting another degree etc), same thing. If you have receive commuter benefits through work (buying a parking or public transit pass)...you guessed it. (weirdly this is the only deduction you can take for FICA, which is otherwise calculated on gross income). If you're itemizing deductions, there's mortgage interest, state tax, property tax, charitable contributions, car registration fees. I'm sure I'm missing more here because I don't itemize. The point I'm making is, no one takes just the standard deduction. If you're going to add all the other taxes in, you really should count all the deductions you can take too. Add all that in and there's no way you should be paying anywhere close to 30%.