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Mitt's effective tax rate

He's saying his "marginal" rate is 43%. That's an income tax concept entirely. Even if he was in the 31% federal bracket he wouldn't be at 43% even at the highest California rate.
 
DeacDiggler said:
He's saying his "marginal" rate is 43%. That's an income tax concept entirely. Even if he was in the 31% federal bracket he wouldn't be at 43% even at the highest California rate.
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I'm not over the FICA max yet (4%). + medicare (1.65%) + 9.3% california + 28% Federal = 42.95%. Would be 45% without the payroll tax holiday.

Considering I work in Santa Monica and we were just "reduced" to a 9.25% sales tax, one could say without the payroll tax holiday my true marginal tax rate is over 50%, which is absurd. (of the 55% net pay I get, 9.25% of that would be used to pay state sales tax for things I'd buy, which would result in a 50.03% tax rate on any raise I might get)
 
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GVegas said:
Sure they do. If I did not have the mortgage interest deduction, I would pay $6,000 more in federal and state income taxes. That's pretty significant. People would have to seriously alter their budgets if it went away.

Also, dividends should be taxed at a lower rate. That money was already taxed at 35% at the corporate level, another 35% would be insane.

And on capital gains, anyone who is willing to risk their after tax money on investing in a business should have some incentive to do so since it is all at risk. Not to mention, investing helps the economy grow by giving companies money to hire and innovate.

Ordinary income is at a higher rate because it is not taxed until it gets int he hands of an employee.
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how big is your mortgage? or do you have a really high interest rate?
 
GVegas said:
Sure they do. If I did not have the mortgage interest deduction, I would pay $6,000 more in federal and state income taxes. That's pretty significant. People would have to seriously alter their budgets if it went away.

Also, dividends should be taxed at a lower rate. That money was already taxed at 35% at the corporate level, another 35% would be insane.

And on capital gains, anyone who is willing to risk their after tax money on investing in a business should have some incentive to do so since it is all at risk. Not to mention, investing helps the economy grow by giving companies money to hire and innovate.

Ordinary income is at a higher rate because it is not taxed until it gets int he hands of an employee.
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investing m oney in the stock market is no different than gambling money in casinos.

In fact gambling more directly creates jobs than buying 100 shares of Google.

Should gambling winnings also be free of taxes? How about lottery winnings?
 
WFFaithful said:
how big is your mortgage? or do you have a really high interest rate?
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6000/.28/12 = 1,785/mo in interest payments for that to be true. For a single person making under 178k/yr, that would be true for any 5% mortgage of around $450,000. Doesn't have to be a large mortgage or a large interest rate to be true.
 
palmab03 said:
I'm not over the FICA max yet (4%). + medicare (1.65%) + 9.3% california + 28% Federal = 42.95%. Would be 45% without the payroll tax holiday.
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Are taking into account your personal exemption and federal deduction for state income taxes (which I assume is higher than the standard deduction based on the 9.3% rate and never mind any other deductions if you are itemizing)?
 
5% interest rate. 28% fed tax bracket and 7% state tax. you do the math.

Assuming tax rates stay the same if the mortgage interest deduction went away, it would be a huge tax increase for America is the point I was making.

It would debilitate the housing market, everyone would be better off renting.
 
palmab03 said:
6000/.28/12 = 1,785/mo in interest payments for that to be true. For a single person making under 178k/yr, that would be true for any 5% mortgage of around $450,000. Doesn't have to be a large mortgage or a large interest rate to be true.
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and you wonder why it's not good to play poker with this guy?
 
RJKarl said:
investing m oney in the stock market is no different than gambling money in casinos.

In fact gambling more directly creates jobs than buying 100 shares of Google.

Should gambling winnings also be free of taxes? How about lottery winnings?
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Haha, who pays taxes on gambling winnings? hell, who even makes money gambling.
 
GVegas said:
Haha, who pays taxes on gambling winnings? hell, who even makes money gambling.
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If you hit a slot machine for over $1500, you have to immediately fill out a W2.

If you are at the track or at a casino sportsbook and hit a bet that pays over 300-1, you have to fill out paperwork.

If you cash over $10,000 in chips at many casinos you have to prove how much started with or fill out paperwork.

If you hit a lottery for over $600, you have to pay taxes on it.

There's no reason buying stocks on major exchanges is any different.

you may have something to say about investing in actual startup businesses. But zero is crazy.
 
Wakelaw2006 said:
Are taking into account your personal exemption and federal deduction for state income taxes (which I assume is higher than the standard deduction based on the 9.3% rate and never mind any other deductions if you are itemizing)?
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I am accounting in the personal exemption but that doesn't affect your marginal tax rate (the amount of tax you pay if you were to earn one more dollar)

As for state taxes, its also a graduated state tax, right now at my current salary my state taxes exactly equals the standard deduction (I believe about $50 short now that they raised the standard deduction for 2012). If I were to get a $7,000 raise I calculated I'd be $600 over the standard deduction (which corresponds, $7,000*.093). I have no other itemized expenses, I'm a renter and my income is just over the phaseout of my student loans.

I literally am at the exact worst place from a marginal tax standpoint one could be in living and working in the worst local district in the worst state in the country as far as tax goes. My next dollar is at 43%.

Then again the Santa Monica pier is 4 blocks away.
 
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RJKarl said:
and you wonder why it's not good to play poker with this guy?
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Actually I could be wrong and its slightly higher than 450,000 @ 5% if he would otherwise use his standard deduction. Thats why I busted out in day 4, I know enough to get close and get one of those W-2's.
 
palmab03 said:
Actually I could be wrong and its slightly higher than 450,000 @ 5% if he would otherwise use his standard deduction. Thats why I busted out in day 4, I know enough to get close and get one of those W-2's.
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I have this picture of you just spinning off the top of your head, like you do odds in a hand.
 
RJKarl said:
If you hit a slot machine for over $1500, you have to immediately fill out a W2.

If you are at the track or at a casino sportsbook and hit a bet that pays over 300-1, you have to fill out paperwork.

If you cash over $10,000 in chips at many casinos you have to prove how much started with or fill out paperwork.

If you hit a lottery for over $600, you have to pay taxes on it.

There's no reason buying stocks on major exchanges is any different.

you may have something to say about investing in actual startup businesses. But zero is crazy.
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All true, but those things are relatively rare. I can't imagine the gov't receives any significant revenue from declared gambling winnings. Most have gambling losses to offset.

Buying stocks is completely different. Someone risked everything when investing in Google as a start up knowing that if it succeeded, there would be a market for them to cash out. And in the mean time, helped create thousands of jobs, hell with google, millions. Without people willing to invest in the market, incentive to grow companies, hire people and innovate would shut down. There should be an incentive to be a part of that.
 
palmab03 said:
Actually I could be wrong and its slightly higher than 450,000 @ 5% if he would otherwise use his standard deduction. Thats why I busted out in day 4, I know enough to get close and get one of those W-2's.
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you're close enough.
 
GVegas said:
All true, but those things are relatively rare. I can't imagine the gov't receives any significant revenue from declared gambling winnings. Most have gambling losses to offset.

Buying stocks is completely different. Someone risked everything when investing in Google as a start up knowing that if it succeeded, there would be a market for them to cash out. And in the mean time, helped create thousands of jobs, hell with google, millions. Without people willing to invest in the market, incentive to grow companies, hire people and innovate would shut down. There should be an incentive to be a part of that.
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Professional gamblers need to declare winnings in order to get a house and a car with their gambling monies. You'd be surprised how many declare accurately. My two roommates in 2006 declared a combined $6.5 million in gambling winnings.
 
Actually the Google IPO was long after it was a big business.

What's the difference between investing in startups and the guy who bets everyday at the track? He studies hard and directly creates jobs by buying beer and food.

Should investing in a company when it starts in a garage be taxed at slightly less than regular income? I coudl seee that but 15% is way too low.

That's not the case in buying Apple stock tomorrow. Your buying 100 or even 1000 shares of their stock will not impact creating any jobs.
 
maybe because our leaders over the years have thought that gambling is immoral and investing is not. Just a guess
 
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