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Sure, but you're leaving out FICA (6.2%) and Medicare (1.45%). This bumps the brackets to 40.65% and 42.65% (or 43.65% and 47.25%). After local taxes this can e
by bhickey 16y ago
Sure, but you're leaving out FICA (6.2%) and Medicare (1.45%). This bumps the brackets to 40.65% and 42.65% (or 43.65% and 47.25%). After local taxes this can easily top 50%. Suppose you earned $357k gross in Rhode Island. Your total tax liability would be in the area of $189k, or 52.7%.
All of this also ignores the employer FICA contribution.
- rdl 16y agoFICA phases out around $100k, but there's also the future ObamaCare 3.8% tax (unearned income) 0.9% (earned income) as well (currently legislated to begin 1 JAN 2013).
- bhickey 16y agoI took this into account in my calculation. While, Social Security payments are capped at $102k (~$6k tax liability), Medicare is uncapped.
- rdl 16y agoThe amusing thing for me is that there are certain incomes where the marginal rate actually goes down when income goes up (although absolute taxes paid always go up), due to phase-outs of deductions, various regressive taxes like FICA, local, etc.. It's actually quite complicated -- someone did a table on Quora, which I can't readily find right now, and it looks like the marginal rate peak for a single person was usually around 180-220k. From a purely efficiency standpoint, it seems like one would want the marginal rate function to be as smooth and ideally monotonic (if not strictly monotonic) as possible.
- ryanwaggoner 16y agoCan you break down your calculation a little? It's way higher than what I got...wondering if you forgot that these are marginal tax rates?
- bhickey 16y agoYou're right. I bungled it up and didn't treat the rates as marginal.