On Sun, 28 Jan 2001, Erik Reuter wrote:
> 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.
I wonder if the *property* taxes they pay on their home was entered into
it. Depending on how high those are, that might bring up the number to
the quoted 46%.
Julia
