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When it comes to finances, people have a shockingly hard time figuring out the true cost of things. I've seen this a lot with things such as driving and income
by moonka 9y ago
When it comes to finances, people have a shockingly hard time figuring out the true cost of things. I've seen this a lot with things such as driving and income taxes. As he mentions, this informational asymmetry works to Uber/Lyft's advantage, so I doubt we will see any changes from them.
- imjk 9y agoCan you explain what people confuse about income taxes?
- moonka 9y agoIn my experience the confusion surrounds 2 things. How brackets and deductions work. Many people don't understand that once your income goes into a higher bracket, you are only taxed at that higher bracket for the income that pushes you into it. For deductions, I've met a lot of people who think that it works essentially as a credit, rather than just saving you your tax rate on that portion.
- Domenic_S 9y agoIt's wording like that that's confusing. Once your income goes into a higher bracket, you are only taxed at that higher bracket for the income _that falls within that new bracket._ The income that _pushed_ you into that bracket is taxed the same way. (and AGI does affect deduction phase-outs so there's that complication...)