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for you to pay "25 percent more of your income."
Here are the current tax brackets:
10% - $0 to $8500 15% - $8500-$34,500 25% - $34.500 - $83,600 28% - $83,600 - $174,400 33% - $174,400 - $379,150 35% - $379,150 and above
Few Democrats and almost no Republicans know how this works, so when we're done here today you'll be WAY smarter than your neighbor!
First, you add up all the money you made from whatever source. Next, you subtract any money you spent on a fairly long list of things (educator expenses, health savings account deposits, penalties on early withdrawal of savings and tuition are among these things) to arrive at Adjusted Gross Income, or AGI. You then remove any deductions and exemptions to arrive at Taxable Income.
We will use "married filing jointly, two children" as your filing status, so:
standard deduction is $11,600 exemptions total $14,600 since you're at the bottom of the same bracket as people who make $140,000 per year, we'll say your taxable income is $85,000...so, if this is a nice easy 1040A tax return with no unusual deductions we'll say you make $111,200 per year. (This, of course, will gain you no sympathy from many of our number, but we'll go with it.)
The tax rates are not "all encompassing" (every dollar you make is taxed at the same rate) but "marginal."
So...
Your first $8500 of taxable income is taxed at 10 percent, or %850 The dollars from $8500 to $34,500 will cost you $3900 The dollars from $34,500 to $83,600 will cost you $12,275 And the dollars from $83,600 to %85,000 will cost you $392
Add them all up and your federal income tax bill is $17,417. Your total EFFECTIVE tax rate is 20.4% on taxable income, or 15.7 percent on all your income. (Of course, if you really are making $111,200 per year you've got other deductions, like business travel, that someone making $35,000 per year doesn't have.
To cost you another 25 percent of your income, you would have to more than double the tax rate at all brackets plus leave the Reagan-era deductions in place. (One thing a lot of people, especially freepers and teabaggers, like to talk about is the fact Reagan cut tax rates. This is true, but he eliminated a LOT of deductions available to working class people, like non-mortgage interest. The result was Reagan's fans could run around bragging about "tax cuts" while in reality the working class's taxes went up under Reagan, sometimes dramatically.) Even the most serious leftist isn't calling for that. Some of us talk about the 70 percent rate Kennedy left us with as a good top rate, but take that in context: only if the Kennedy deductions and exemptions are reinstated should taxes go that high. Kennedy's rates plus Reagan's deductions equal widespread tax evasion.
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