How is America's Income Tax Burden Weighted?

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How is America's Income Tax Burden Weighted?

Posted by Prisha 693 days ago, popular 693 days ago (http://blog.turbotax.intuit.com)
Category: Business | Tags: income jobs money tax

Here, we analyze data from the Tax Foundation in detail – who pays the most, who pays the least, and how the progressive nature of American income taxation shapes the outcome.

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StigNordas 693 days ago

Good info!

Wiseguy 693 days ago

Unfortunately, by my understanding the author of this article incorrectly explains how the "progressive tax" system works. In his example, the person in the highest marginal tax bracket (38%) pays a total of 38% on their entire income, not just the amount of their income over that tax rate's threshold ($375,650). A 38% marginal tax rate does NOT imply a 38% effective tax rate.

Wiseguy 693 days ago

To be clear, "progressive" just means that rates are higher the more you make, which is true. I should have simply said that the author incorrectly exemplifies the concept of the "marginal tax rate."

JoeTaxpayer 692 days ago

Wow, surprised that slipped by. Wiseguy - you are right on. The author of the post did the math wrong. Marginal rates do not work the way his $375K*.38 suggests. He also ignores the standard deduction as well as exemptions. When I have a second I may give a polite alert to my friends at TurboTax. A small bit of editing can clean it up.

Wiseguy 692 days ago

Thanks, Joe. I wrote a very long and detailed comment on that article (complete with infographic!), but as of this moment it's still awaiting moderation and is not publicly visible. I did not write it to publicly shame the author or flaunt my sense of superiority. Rather, it seems many people still don't understand how marginal tax rates work (and this article might add to the confusion), so it is a topic worth explaining in detail. Come to think of it, with some tweaking that comment might be a Tip-worthy article on its own that I should repost somewhere.

JoeTaxpayer 692 days ago

No prob, as I am a guest poster at TT, I sent a note to the gal I submit to there. It's probably cleaner to fact check and edit than to keep comments that correct the post itself. Not my call though.

You have a kind attitude, nice to see.

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