3 ms·
> You very much know that many people think that “when you get in a higher tax bracket” that all of your income gets taxed more. Because it does. Stop being de
by puffoflogic 5y ago
> You very much know that many people think that “when you get in a higher tax bracket” that all of your income gets taxed more.
Because it does. Stop being deceitful by pushing the free variable over to one extreme of all the extra tax being allocated to the margin. Literally any other allocation results in the conclusion that some additional tax is taken from the baseline income.
This is the natural way to look at it. When I get taxed throughout the year, I don't see my first $X get taxed at Y% and then the next %X' get taxed at %Y'; I see the whole lot get taxed at Z%, Y<Z<Y'. And at the end of the year, I don't see that I have paid Y% or Y'% of my income, I see that I have paid Z% of my income. Marginal tax rate is propaganda with no basis in reality. Average tax rate is the only meaningful number.
Marginal tax rate provides a convenient way to define a piecewise progressive tax curve which is continuous by construction, which is a nice property, but it is just a convenience. The function is still increasing everywhere above the negative tax cutoff. Every dollar earned does result in more taxes being paid on the whole income.