Not quite. Some taxes are paid by the employer, and some taxes are withdrawn directly from your paycheck. When you are self-employed, you see exactly how Uncle Sam gets both sides of the action.
I'm not American, but every time I look at taxation levels, I come out with a number significantly smaller than that. I presume that America uses progressive taxation, so at what income level does personal income + payroll tax equate to 50% of gross?
In short, if anyone is paying that much in taxes they are very much doing it wrong... and I kind of doubt people are.
> Under the SE Tax Act, self-employed people are responsible for the entire percentage of 15.3% (= 12.4% [Soc. Sec.] + 2.9% [Medicare]); however, the 15.3% multiplier is applied to 92.35% of the business's net earnings from self-employment, rather than 100% of the gross earnings; the difference, 7.65%, is half of the 15.3%, and makes the calculation fair in comparison to that of regular (non-self-employed) employees.
The rest of your figures aren't really what I'd consider personal income taxation, although they're definitely interesting. Also interesting is that married people in the US of A experience a tax advantage when filing jointly - not so our tax code, it's very theoretically pure.
It's not quite that simple. Filing jointly confers a tax advantage when the couple makes relatively little, but becomes neutral as they earn more, and is actually a tax disadvantage when the couple makes a significant amount.
That could be the catchphrase for the entire US tax code. :D
> The rest of your figures aren't really what I'd consider personal income taxation, although they're definitely interesting
I'd say that sales tax is personal, but property tax maybe not, since that isn't directly related to income. However, it still means that for every dollar that someone pays you to do work, you only get to spend 58 cents.
Does US sales tax apply to purchases by a business?
No, they aren't. There are a handful of states where the top marginal rate (combining federal and state rates) is at or above 50%, but that's not the overall rate even for those top earners, and its certainly not the average overall rate in the country.
[1] Because of the real estate, many of these types of places are not really 'livable', and you see entry level jobs that offer salaries already at or neat the top tax brackets (despite the fact that these people have few/no assets or real 'net worth').
The claim was that personal income tax "in the US" was about 50%.
That's very different than saying the truth which is that "maximum marginal income (including payroll) tax rates in the highest-tax US states are around 50%".
> you see entry level jobs that offer salaries already at or neat the top tax brackets
The top US federal marginal rate starts at $400,001 for a single filer; $450,001 for married filing jointly/qualified widow(er), $225,001 for married filing separately, and $425,001 for head of household.
I've never seen anything fairly described as entry-level offering a salary at or near that, even in expensive places like SF.
eg, $90K in California? back of the envelope
28% $87,850 to $183,250 Federal Rate
15.30%* Social Security, self employed
8.8% State-Level taxes
=======
~ 52% Aggregate tax rate (excluding 9% sales tax average).
This is not an average rate, nor does it include the provision of the healthcare mandate. In any event, this is meant to be illustrative only, and the marginal and average dynamics play out differently at higher rates (for a variety of reasons, including tax-sheltering and regressive taxes on payroll and sale/consumption taxes).
[1]http://www.calcxml.com/calculators/federal-income-tax-calcul...
In your example of someone earning $90k in CA, the federal income tax rate of 28% only applies to the $2150 of income above the threshold of $87,850, the rest is taxed at lower rates according to the lower brackets. The same applies to state taxes, except the brackets are different.
The effective tax rate (e.g. the total amount of tax you pay / your total income) has a lot more meaning, and that one is a lot lower than 50%.
The original claim that started this thread, "Personal income taxes are about 50% in the US", is not true at all.
No, its a 52% combined marginal rate, not a 52% tax rate. And, since we're talking about taxes on income, "excluding 9% sales tax" is a red herring, because sales tax is not a tax on income. (And California's statewide sales tax is 7.5%, not 9%.)
> In any event, this is meant to be illustrative only
And what it fails to do is illustrate that the claim "Personal income taxes are about 50% in the US" is true. the fact that if you choose one of the states with the highest state taxes on personal income (including both income and payroll taxes), the top marginal tax rates on personal income just exceed 50% does not mean that personal income taxes in the US are about 50%. In fact, it demonstrates that personal income taxes in the US are generally substantially less than 50%.
Exactly. The. Point. Go read the my comment in context... Not only do I set out to illudtrate the marginal tax rate, I expressly not that it is not the average rate. There is a reason for that, which I mention earlier...too. Which I won't repeat myself to point out here.
Edit: I suppose it could be argued that money that goes to the military doesn't directly mean funding wars. We have bases all over the world after all.