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by CptJamesCook 1765 days ago
37% federal, 13.3% california = 50.3

Most wealthy people spend another 1-2% of their income on property taxes and a bit on sales taxes, etc. I estimate I pay 53% of my income to taxes. I agree that 55% is unlikely tho

3 comments

The 37% and 13.3% are on marginal income, as I'm sure you know. The effective tax rate is much lower.

California and some other states also have required disability insurance that is taken out with the state income tax. It's 1% in CA.

And I would count Social Security and Medicare too, equally 7.65%. But the SS part has a cap so the percentage goes down the more you make.

All put together, someone making $250K pays about 37% on that to various income taxes listed above. If you were making 1M income a year, that rises to 47%. For 100K, it's about 30%.

How much is also taxed on the employer payroll side?
The employer pays the same social security and medicare taxes as the employee and also has a cap on the social security part, plus in some cases an unemployment tax.

If you want to include employer taxes, to calculate if the employer wants to pay you 250K how much you would get, then it's be about 42%. At 100K, it'd be about 38% since you don't reach the SS cap.

Of course, there's a couple other tricks in there, like the government can embed some tax into the healthcare costs which are required for employers to buy, but then there's also deductions that are hard to turn into a percentage like this.

The federal rate is progressive and not on the entire income. 37% applies only on the taxable income above $518K. Why is this misrepresentation?
I spent an hour arguing about taxes with someone until I realized that they didn't understand how marginal taxes worked. I bet you dollars to donuts that if you start talking about taxes in a room full of upper-middle class people, one will tell you about people choosing not to earn more money so they don't get "bumped" into a higher tax rate.
You don't pay 37% federal. 37% is only for the top bracket.