6 ms·

So what is my tax rate if I go from $249,999 to $250,000? How much money in real dollars do I lose when I earn a buck more to make it to a quarter million?

by bprater 18y ago

bkbleikamp 18y ago
The $1 gets taxed in the highest tax bracket.
vaksel 18y ago
You'll pay 4 cents more in taxes compared to what you pay now. Although to be fair, you'll probably pay less than you do now, since the lower brackets will get a tax break.
- rsheridan6 18y ago
  The top tax bracket is only going up 4 percent, but Obama is also changing the tax deduction rules to be less favorable to the rich. The difference will be more than 4%.
aaronblohowiak 18y ago
Your question implies a lack of understanding of how our tax system works. You have several tax rates, covering different portions of your income.
tempest67 18y ago
I see this has been answered several times already, but I'm not sure it has been laid out plain and simple: The first $250K any American makes gets taxed at exactly the same rate. For everybody. It's the same for any value -- Bill Gates pays exactly the same tax rate on the first $50K he makes in a year as I do. The rates go up for successively higher values -- your first n dollars may not be taxed at all; then your next n dollars is taxed at a low amount, and successively higher. These bottom rates will not change no matter how much your total income is. When they talk about raising the tax rate for people that make more than a certain value, they are talking only about taxes on the money OVER that value. So only your 250001st dollar gets taxed at the higher rate -- as will every other dollar you make on top of that. The tax rate for the rest of your money will not change at all.
abossy 18y ago
The point is that the work incentives are diminished at your high income. The value you are creating that is being compensated for at ~$250k hits a glass ceiling. You aren't exactly losing money, there's just no point in working more at your highly specialized profession. The author of the original article doesn't quite understand this point. A blog post by (right-wing) Harvard professor Greg Mankiw clearly explains this: http://gregmankiw.blogspot.com/2008/10/blog-post.html http://gregmankiw.blogspot.com/2008/10/blog-post.html
- cedsav 18y ago
  The higher your income, the lower your work incentive should be anyway (regardless of tax situation). You can afford to slow down and enjoy life. I don't believe that people change their work habit, or choose to work less, just because of a relative tax increase. However, they may be more inclined to find more tax efficient schemes.
  - anamax 18y ago
    > You can afford to slow down and enjoy life. You're thinking of it from the wrong side. You want these people to work hard and long because they're good at what they do. You benefit from their work. You don't benefit as much from their vacation.
    - cedsav 18y ago
      I don't disagree with that. I'm just doubtful about this particular tax issue having a real impact on people willingness to work more or less
    - jrockway 18y ago
      Yeah, I'm sure glad these people were buying subprime mortgages instead of taking a vacation.
      - anamax 18y ago
        Huh? Folks earning around $250k and thinking about cutting back are not the folks who got subprime mortgages.

So what is my tax rate if I go from $249,999 to $250,000? How much money in real dollars do I lose when I earn a buck more to make it to a quarter million?

by bprater 18y ago

So what is my tax rate if I go from $249,999 to $250,000? How much money in real dollars do I lose when I earn a buck more to make it to a quarter million?

bkbleikamp 18y ago

The $1 gets taxed in the highest tax bracket.

vaksel 18y ago

You'll pay 4 cents more in taxes compared to what you pay now. Although to be fair, you'll probably pay less than you do now, since the lower brackets will get a tax break.

rsheridan6 18y ago
The top tax bracket is only going up 4 percent, but Obama is also changing the tax deduction rules to be less favorable to the rich. The difference will be more than 4%.

aaronblohowiak 18y ago

Your question implies a lack of understanding of how our tax system works. You have several tax rates, covering different portions of your income.

tempest67 18y ago

I see this has been answered several times already, but I'm not sure it has been laid out plain and simple: The first $250K any American makes gets taxed at exactly the same rate. For everybody. It's the same for any value -- Bill Gates pays exactly the same tax rate on the first $50K he makes in a year as I do. The rates go up for successively higher values -- your first n dollars may not be taxed at all; then your next n dollars is taxed at a low amount, and successively higher. These bottom rates will not change no matter how much your total income is. When they talk about raising the tax rate for people that make more than a certain value, they are talking only about taxes on the money OVER that value. So only your 250001st dollar gets taxed at the higher rate -- as will every other dollar you make on top of that. The tax rate for the rest of your money will not change at all.

abossy 18y ago

The point is that the work incentives are diminished at your high income. The value you are creating that is being compensated for at ~$250k hits a glass ceiling. You aren't exactly losing money, there's just no point in working more at your highly specialized profession. The author of the original article doesn't quite understand this point. A blog post by (right-wing) Harvard professor Greg Mankiw clearly explains this: http://gregmankiw.blogspot.com/2008/10/blog-post.html http://gregmankiw.blogspot.com/2008/10/blog-post.html

cedsav 18y ago
The higher your income, the lower your work incentive should be anyway (regardless of tax situation). You can afford to slow down and enjoy life. I don't believe that people change their work habit, or choose to work less, just because of a relative tax increase. However, they may be more inclined to find more tax efficient schemes.
- anamax 18y ago
  > You can afford to slow down and enjoy life. You're thinking of it from the wrong side. You want these people to work hard and long because they're good at what they do. You benefit from their work. You don't benefit as much from their vacation.
  - cedsav 18y ago
    I don't disagree with that. I'm just doubtful about this particular tax issue having a real impact on people willingness to work more or less
  - jrockway 18y ago
    Yeah, I'm sure glad these people were buying subprime mortgages instead of taking a vacation.
    - anamax 18y ago
      Huh? Folks earning around $250k and thinking about cutting back are not the folks who got subprime mortgages.