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The lower brackets need work too. If the poor are doing what the wealthy say they should be doing and picking themselves up by the bootstraps, they eventually h
by JustSomeNobody 8y ago
The lower brackets need work too. If the poor are doing what the wealthy say they should be doing and picking themselves up by the bootstraps, they eventually hit that tax cliff from 12 to 22% where a raise can actually penalize them.
"Hi poor people! Welcome to making money, here let me take 10% more of it away from you. Can't let ya catch up too fast, now can I!?"
- foota 8y agoThat's not how tax brackets work. The new bracket applies only to income in that bracket, entering the 22% bracket means that income above that threshold is taxed at 22%, your income below that is still taxed at 12%.
- derekp7 8y agoThe higher tax bracket only applies to the additional dollars earned, so mathematically it can't penalize you when you make more money (I'm assuming you are using "penalize" to mean "you take home less overall pay"). And you have to make about 50K (factoring in the 12K standard deduction) for that to happen. At that point, you should be using some of the extra money to dump into a 401(k) plan, which comes "off the top" for tax purposes. So 10% in 401(k) means you have to hit 55K before the additional funds start to diminish returns.