* Dan Minette ([EMAIL PROTECTED]) wrote: >> (taxes paid to government over one's lifetime- cash benefits received >> from government over ones lifetime)/total income over one's lifetime.
>>I just realized the source of the difference. We are both writing out >>the formula for lifetime net tax rate, but the numbers in the chart, and >>the idea I have in mind, is MARGINAL lifetime net tax rate. >OK, I can work with that. I'm glad we have the same formula...that's >progress. >I should >have labeled that chart marginal, to be clear (by the way, I copied it >from Kotlikoff's book, not the website -- in the book only the website >is referenced, not a specific location) >>When people talk about being in the 37% tax bracket, they mean that >>their marginal tax rate is 37%, in other words, $0.37 of every >>additional dollar they earn (above their current income) goes to taxes. >OK, that's fine. I'll explictly adress marginal tax rate when I revisit my >example. >>With a non-working spouse considering working, the marginal lifetime net >>tax rate can be very high, since SS benefits increase very little until >>the newly working spouse begins to make quite a bit more money than the >>long-working spouse. >But, I still don't see it getting above 40 %. Let's look at the last $1k >of earnings of the spouse looking at a 20k/year job. She's in the 15% >marginal income tax bracket, her SS tax is 7.65%, and she is working for >too few years to qualify for SS on her own. That gives a marginal federal >tax rate on that last $1k to 22.765%. We'll also assume her net tax is her >gross tax, since she gets no extra SS from working. >They will spend more money, and on some of that spending they'll have to >pay sales tax. But, another 3%-4% should cover that. >With taxes on the phone bill and what-not, I can see the marginal tax rate >rise to 30%, but not much more unless they now buy a new house with higher >real estate taxes....but that pretty problematic when one is just >considering the last $1000. I think it is fair to consider only step ups >in the same spending patterns for marginal rates, not major changes like >buying a bigger house. >Further, we keep pretty close tabs on our family budget, and we have often >calculated when it would be worthwhile for Teri to work. The Continental >job was worthwhile, because we were beyond the need for day care, mostly, >and because the hours were not bad for part time work. But, our marginal >return on Teri's pay was far more than 20%. It was over 60% by my >calculations. >When you get time, can you show me how they get to 80%+ in their example? >Are they defining marginal taxes differently than I do? >Dan M. Yummy, good talk, less angst, more to learn from.... this is getting better by the second. Thanks for persisting Erik, Dan, Doug et al. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
