4 ms·

I think he means effective marginal rate. 70% is nice and all, but when you are able to deduct 40% of that, is it really higher than 30%?

• mikeash 8y ago
  “Effective marginal rate” is a nonsense phrase. We can discuss marginal rates or effective rates but you can’t combine the two. I assume the other commenter is doing the standard, “that rate doesn’t really count because nobody really paid it.” Which is a perfectly good point, but it’s not accurately expressed by pretending that marginal rates weren’t that high.
  • dragonwriter 8y ago
    You can absolutely compare effective marginal rates; if you have effective rate data by income level, you can calculate from that effective marginal rates, which are simply the effective rate on the difference between the nth and (n+1)th dollar. OTOH, because one of the big ways this is manipulated is by income that isn't “counted” as income, getting good data from which to estimate effective marginal rates is tricky and you end having to make assumptions that are hard to validate.