On Sat, Jan 27, 2001 at 11:44:00PM -0500, John D. Giorgis wrote:
> You hit the nail with the first sentence. I was actually surprised at
> how low I pegged it. According to John Stossel on ABC tonight, even a
> middle class family (husband works as a roofer, the wife works as a nurse,
> both in St. Louis) pay FORTY-SIX percent of their income in tax.
Is that marginal rate or total rate? For marginal rate it sounds high
to be me but I could believe it (if I saw the detailed accounting, perhaps
there are some special circumstances).
But if they claimed that was the TOTAL tax, then I don't believe it.
There is something fishy there.
Missouri's highest tax bracket is 6% (I won't count exemptions or
find out whether the intitial amounts are taxed at a lower rate, I'll
just assume it is all taxed at 6% and so overestimate the tax)
For joint filing, the married couple gets taxed 15% on the first
$43,050 and 28% on the rest (up to $104,050, which I will assume
they are making less than). Again, I'll try to overestimate the
taxes, since you didn't specify their income let's be generous
and say $100,000. Then they pay 22.4% in federal income tax.
FICA (which includes 6.2% for SS and 1.45% for Medicare) totals 7.65%.
Normally, employer pays 7.65% and employee pays 7.65%, but if you
are self-employed you pay both, which comes to 15.3%. The nurse probably
pays 7.65%, but the roofer could go either way. To overestimate again,
I will assume their ENTIRE income is taxed at 15.3%. (Also, there is
normally a cap on SS tax, I think it kicks in at income around $70,000
but I don't remember exactly; anyway, I will ignore the cap to
overestimate)
So, adding up 6+22.4+15.3 we get 43.7%, which is probably a significant
OVERESTIMATE, but it is still less than 46%. If we replace 22.4 with
the marginal rate 28%, then we could get a number like the one quoted.
But that is quite misleading since marginal rate is not what most
people would interpret the statement that a person pays 46% in taxes
to mean.
I'd really like to see how that 46% number was calculated.
--
"Erik Reuter" <[EMAIL PROTECTED]> http://www.erikreuter.com/
