The Real-World Middle Class Tax Rate: 75%
Not sure I buy this, but it's food for thought:
Above a rather modest $34,600 in taxable income and up to around $106,000, the real-world middle class tax burden in high-tax American locales is 75%:
Social Security and Medicare: 15.3%
Federal income tax: 25% (28% above $83,600)
State income tax: 5% (mid-range)
Healthcare insurance: 15%
Property tax: 15%
15% + 25% + 5% + 15% + 15% = 75%
Clearly, the percentage of income devoted to healthcare insurance and property taxes declines as income rises. Someone earning $200,000 has not only dropped the 12.4% Social Security tax for income above $106,000, healthcare insurance and property taxes as a percentage of their income drops from about 30% for those earning around $86,000 to 15%.
We can argue fruitlessly about how many tax angels can dance on the head of a pin, but all the caveats and quibbles don't change the basic fact that real-world tax rate for the "middle class" earning more than $34,500 in taxable income in high-tax locales is a confiscatory 75%.
Please don't tell me the U.S. is a "low-tax" nation; I might suffer a breakdown that I couldn't afford due to exclusions in my "voluntary" healthcare coverage.
via Guest Post: The Real-World Middle Class Tax Rate: 75% | ZeroHedge.
UPDATE (same day):
Per the US Census, the 2006-2010 median household income was $51,914 (in 2010 dollars). There are issues with using household income as a measure, but let's skip that for now.
Income tax is marginal. If you're at the 25% rate, you're only paying on that part of your income in that bracket. The portions of your income in the earlier brackets are taxed at the levels for that bracket. Thus at the 25% rate, you pay in four brackets: 0% of $0-9,500, 10% of $9,501-18,000, 15% of $18,001-44,000, and 25% of $44,001-93,100.
Given the median household income of $51914, the subtotals for the brackets are:
- 0% of $9500 = $0.00
- 10% of $8499 = $849.90
- 15% of $25,999 = $3899.85
- 25% of $7916 = $1979.00
The total income tax paid would be $6728.75, which is 12.96% of $51914.
So, for that income level, the above income tax percentage would be 13%, not 25%, resulting in a total tax percentage of 63% (not 75%). Even so, that's almost 2/3rds of one's income to taxes. That doesn't include sales taxes and other fees.
UPDATE 2:
God only wanted 10%. Hell, even the Joker only wanted half.