Top 1% of Americans Get Largest Share of National Income Since 1928

Except, again, you didn't blow it up. I mentioned in the very next post that I was referring to incremental tax - that was before you ever posted. However, if you want to talk about "blowing things up" let's start here:

Do the same math for 500,000, you get a total of $154882, which is 31%, add medicare and ss, you are looking at 40%.


This is your exact claim about the $500,000 earner. What you miss, however, is that SS taxes end at $95,000 or so. So, no, you don't get to 40% because on $400,000 of that, you're only paying 2.9% in medicare taxes.

In total, you will pay $14500 in medicare, and about $12200 in SS taxes. So if you add that to your $154882, you end up at $181,582, or 36%. As you go up from there, you tax will continue to trend towards 37.9% as indicated in my first post because you will be paying 37.9% on any dollar amounts above $500,000.

Now, this ignores ALL deductions and assumes no capital gains and dividends - which is nowhere close to realistic. If someone's making $500,000 and has no investments or deductions, then they are a financial wreck. In other words, this is a worst case scenario and you still can't get to your 40% claim. Perhaps you're the one that should learn to walk before you run.

And again, back to the original point, the if the middle class dude makes an extra $1000, he's paying more on taxes (40%) on that than if they $500,000 dude makes an extra $1000 (37.9%).

 

Certainly an option. Or at least reducing the size & cost of these programs so you can cut the rates, or expand the tax to cover all income, which would significantly reduce the rate and get rid of the regressive nature.

 

TJ has been proved to be a liar on this board many times. Why on earth would antone believe him now?

 

Why should someone in the top tax brackets pay SS tax on their entire income when they aren't getting the benefit? I would in an instant, heart beat, whatever gladly sign away all of my SS benefits/rights if I no longer had to pay into it.

 

Which is exactly why I think misleading to include SS in the tax calculation.

 

Did you forget that the 12.4% SS tax you included in the 40% tax rate for middle class dude, he suppose to get it back when he retires? And the 37.9% rich dude is paying, he is getting none back?

Go back and try again.

 

No doubt, SS is really more like a retirement plan (a bad one) than tax.

 

I'd love to be able to contribute to a Roth IRA.

 

I agree. But SS is a welfare program like any other. You pay taxes to cover benefits for today's retirees, and tomorrow's retirees will tax taxes for your retirement. You're not really paying for your own benefits, though you do get a larger benefit in the end if you contribute more. But you pay taxes for all sorts of things you don't benefit from. Why should this be treated any differently?

Regardless, the discussion wasn't really about whether the taxes were fair or what they should be - it was about what portion of people's income is paid in income-based taxes.

 

What stops you from doing that?

 

Doesn't the rich dude get his SS when he's old too?

 

All of that is irrelevent to a discussion of what portion of their income a person is paying at a given time. Besides which, we have no idea what the status of SS will be in 30 years, so relying on it being the same as its structured now is a terrible idea.

Funny comeback, though, given that you didn't include that in any of your earlier discussion either. Why focus on that now?

 

Yes he does, but he already paid his before the 37.9% bracket hits. So for that 37.9%, he is not getting anything back.

 

There are income restrictions on being able to contribute to a Roth IRA. But Roth IRA's aren't as beneficial to someone with a lot of income now anyway since the traditional will give you a larger tax break now, so it's not as big a deal as one might think (though it still can be a disadvantage and does reduce your options). Whether a Roth is really benefiical depends on what the tax structure will be like when you retire.

 

There are income limitations.

I just learned about a Roth 401(k) that anyone is able to contribute to but I don't know of any brokerages that offer them yet. I'm hoping that ETrade offers one soon since that is where I have all of my retirement accounts. I've been told that you can do the same with some sort of variable annuity but I do not know a whole lot about it and I'm kind of skeptical since everything I've read about annuities have been to steer clear of them.

 

Gotcha.

Thanks. Let's exclude SS then.

 

Try Vanguard, solid group.

 

How is paying no capital gains tax not that big of a deal?

 

You pay tax now and you are not paying tax when you take it out (Roth). You do not pay tax now but you pay tax when you take it out (traditional) So it is complicated to compare which is better based on many factors.

 

I understand the concept.

If you can max out your 401k and your traditional IRA, why not get the Roth benefit as well if you can afford it?