5 ms·

What do you do that you pay >60% of your income in taxes? I'm self employed and hit ~%30.

slumdev 5y ago
Federal income taxes Social Security taxes Medicare taxes State income taxes Local income taxes State/local real property taxes State/local personal property taxes Sales taxes It's pretty easy to get to 50 or 60%, depending on how much you make and what state you live in.
- nerdponx 5y ago
  I live in a high-tax area (including local taxes), in a relatively high tax bracket, with few/no special credits or deductions, and I don't pay anything close to 50%. Unless you own an absolute shitton of property and have an abnormally high property tax liability relative to your income, in which case you have an abnormal financial situation that isn't generalizable to other people. Maybe this is typical if you're a landlord and your source of income is mostly real property, but that's not a typical situation either. Also, Congress doesn't have much control over state sales taxes, property taxes, etc.
  - mullen 5y ago
    Also, if they are a landlord, the renter is paying their property tax, not them.
- jljljl 5y ago
  Total SALT paid as a % of income actually _decreases_ the wealthier you are, since sales and vehicle taxes tend to be regressive. It varies by state, but on average for the top 1%, it looks like average effective tax rate in the US comes out to around 38-39% https://www.visualcapitalist.com/unequal-state-tax-burdens/ https://www.visualcapitalist.com/unequal-state-tax-burdens/ https://www.getrichslowly.org/effective-tax-rates/ https://www.getrichslowly.org/effective-tax-rates/ I’m not sure how to get 50% - 60%… maybe that’s referring to your top marginal tax bracket?
  - deleted 5y ago
    [deleted]
  - slumdev 5y ago
    No, marginal rates don't even go that high. Once you include sales taxes (which are 12% in a jurisdiction not far from my home) and property taxes (which aren't taken against income but are still taxes), it's not hard to get to a 50-60% total tax burden (across all tax authorities).
- triceratops 5y ago
  > It's pretty easy to get to 50 or 60%, It's really, really not. You'd have to be making high 7 or low 8 figures in ordinary income annually and own expensive real estate and spend a shit ton of money on other stuff that has sales taxes. Tax rates aren't additive. A 40% top federal bracket and a 10% top state bracket don't result in 50% of your actual income going to taxes.
  - slumdev 5y ago
    > A 40% top federal bracket and a 10% top state bracket don't result in 50% of your actual income going to taxes. Our household is in the top 5% (not even top 1%) nationally, living in a medium-tax state, and we managed to max out the SALT deduction. Practically speaking, this means that for the portion of income taxed by state and local authorities resulting in taxes in excess of 10k, we are also (doubly) taxed by the federal government. It truly is (partially) additive.
    - triceratops 5y ago
      > we managed to max out the SALT deduction We can all thank the Trump "tax cuts" for that. > It truly is (partially) additive. On that portion of your income. I reiterate what I said earlier. To have an actual effective 50% tax rate, you need to be earning well over $1m. That's not "easy" or a typical case.
  - TheCoelacanth 5y ago
    Also, Social Security taxes stop after the first $137k of income, before the top income tax rates kick in. You will never be paying Social Security taxes and the top marginal income tax rates on the same dollar. There is no overlap.
jorgBaller 5y ago
EUSSR
willcipriano 5y ago
These percentages can be all over the place due to different definitions of tax. Are you only talking federal or fully loaded? Do you only look at withholding or do you factor in any refunds? Do you include sales tax? What about increases to the prices of goods you buy due to corporate taxes? Capitol gains on your investments? Various fees that are paid to the government? The cost of compliance with regulations that you wouldn't of done otherwise? What about fines, commonly a large revenue generator in rural areas? Property taxes? Higher prices due to governmentally enforced monopolies? Devaluation of your holdings due to the printing of more currency? To start we must first agree on what we are counting.
- TheCoelacanth 5y ago
  Even using the most inclusive possible definition, that doesn't seem plausible. All taxes combined in the US including state, local, corporate and so on, add up to 24.5% of GDP[1]. [1] https://www.oecd.org/tax/revenue-statistics-united-states.pdf https://www.oecd.org/tax/revenue-statistics-united-states.pd...
  - deleted 5y ago
    [deleted]

Federal income taxes Social Security taxes Medicare taxes State income taxes Local income taxes State/local real property taxes State/local personal property taxes Sales taxes It's pretty easy to get to 50 or 60%, depending on how much you make and what state you live in.

nerdponx 5y ago
I live in a high-tax area (including local taxes), in a relatively high tax bracket, with few/no special credits or deductions, and I don't pay anything close to 50%. Unless you own an absolute shitton of property and have an abnormally high property tax liability relative to your income, in which case you have an abnormal financial situation that isn't generalizable to other people. Maybe this is typical if you're a landlord and your source of income is mostly real property, but that's not a typical situation either. Also, Congress doesn't have much control over state sales taxes, property taxes, etc.
- mullen 5y ago
  Also, if they are a landlord, the renter is paying their property tax, not them.
jljljl 5y ago
Total SALT paid as a % of income actually _decreases_ the wealthier you are, since sales and vehicle taxes tend to be regressive. It varies by state, but on average for the top 1%, it looks like average effective tax rate in the US comes out to around 38-39% https://www.visualcapitalist.com/unequal-state-tax-burdens/ https://www.visualcapitalist.com/unequal-state-tax-burdens/ https://www.getrichslowly.org/effective-tax-rates/ https://www.getrichslowly.org/effective-tax-rates/ I’m not sure how to get 50% - 60%… maybe that’s referring to your top marginal tax bracket?
- deleted 5y ago
  [deleted]
- slumdev 5y ago
  No, marginal rates don't even go that high. Once you include sales taxes (which are 12% in a jurisdiction not far from my home) and property taxes (which aren't taken against income but are still taxes), it's not hard to get to a 50-60% total tax burden (across all tax authorities).
triceratops 5y ago
> It's pretty easy to get to 50 or 60%, It's really, really not. You'd have to be making high 7 or low 8 figures in ordinary income annually and own expensive real estate and spend a shit ton of money on other stuff that has sales taxes. Tax rates aren't additive. A 40% top federal bracket and a 10% top state bracket don't result in 50% of your actual income going to taxes.
- slumdev 5y ago
  > A 40% top federal bracket and a 10% top state bracket don't result in 50% of your actual income going to taxes. Our household is in the top 5% (not even top 1%) nationally, living in a medium-tax state, and we managed to max out the SALT deduction. Practically speaking, this means that for the portion of income taxed by state and local authorities resulting in taxes in excess of 10k, we are also (doubly) taxed by the federal government. It truly is (partially) additive.
  - triceratops 5y ago
    > we managed to max out the SALT deduction We can all thank the Trump "tax cuts" for that. > It truly is (partially) additive. On that portion of your income. I reiterate what I said earlier. To have an actual effective 50% tax rate, you need to be earning well over $1m. That's not "easy" or a typical case.
- TheCoelacanth 5y ago
  Also, Social Security taxes stop after the first $137k of income, before the top income tax rates kick in. You will never be paying Social Security taxes and the top marginal income tax rates on the same dollar. There is no overlap.

jorgBaller 5y ago

EUSSR

willcipriano 5y ago

These percentages can be all over the place due to different definitions of tax. Are you only talking federal or fully loaded? Do you only look at withholding or do you factor in any refunds? Do you include sales tax? What about increases to the prices of goods you buy due to corporate taxes? Capitol gains on your investments? Various fees that are paid to the government? The cost of compliance with regulations that you wouldn't of done otherwise? What about fines, commonly a large revenue generator in rural areas? Property taxes? Higher prices due to governmentally enforced monopolies? Devaluation of your holdings due to the printing of more currency? To start we must first agree on what we are counting.

TheCoelacanth 5y ago
Even using the most inclusive possible definition, that doesn't seem plausible. All taxes combined in the US including state, local, corporate and so on, add up to 24.5% of GDP[1]. [1] https://www.oecd.org/tax/revenue-statistics-united-states.pdf https://www.oecd.org/tax/revenue-statistics-united-states.pd...
- deleted 5y ago
  [deleted]