> (28% income tax, 2% medicare, 6% social security) This year, the 28% tax bracket for a single individual stars at $87,850 taxable income. The Social Securit

> (28% income tax, 2% medicare, 6% social security) This year, the 28% tax bracket for a single individual stars at $87,850 taxable income. The Social Security cap is $113,700, and the Social Security tax is levied on all income below this. The individual standard deduction is $6100 and the personal exemption is $3900. That means that for an individual, a 28% income tax rate means income is above $97,850 while paying Social security taxes means income is below $113,700. I sort of doubt this covers "most people". For a couple, the 28% bracket starts at $146,400 taxable, the standard deduction is $12,200, and personal exemptions are $7,800. So in this case the rate you quote applies to income over $166,400 and below $227,400 if both members of the couple have equal salaries. Again, hardly "most people". Finding good numbers on this is hard, but http://answers.yahoo.com/question/index?qid=20101119053457AA2Anap http://answers.yahoo.com/question/index?qid=20101119053457AA... suggest that somewhere around 46% of taxpayers fall in the 10% or 15% brackets, and that's ignoring the effects of EITC and whatnot.... Of course the 15% bracket definitely has a marginal rate of 23% or so, again ignoring EITC and various other tax credits you can claim at those income levels that phase out with income, since they're certainly paying FICA at that point. > investments are only taxed at a flat 15% It really depends. Dividends are sometimes taxed at this rate and sometimes at your normal income rate, depending on whether they're qualified or not. Capital gains are, if you hold long enough. And capital gains can, of course, still affect your AMT exemption, meaning that if you're in the the AMT phaseout range your marginal rate on even long-term capital gains is about 22% (15% + 25%*28%, since the phaseout applies to normal income). Of course once you make so much money that the AMT becomes irrelevant your marginal rate on capital gains drops back down to 15%.