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001sky

Fair enough, but by 'the top tax brackets' I meant those sufficient to trigger combined taxation approching 50%,

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

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~ 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).

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It doesn't make any sense to add up the highest marginal tax rates like that though.

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.

> 52% Aggregate tax rate (excluding 9% sales tax average).

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%.

its a 52% combined marginal rate,

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.

Nope. The federal Rate would be much lower. You would be in the 28% tax bracket but your tax rate wouldn't be 28%. [1] Grabbing a random tax calculator on line suggests that at 90K of gross income the highest your federal tax rate could be is about 16.6%.

[1]http://www.calcxml.com/calculators/federal-income-tax-calcul...

We can easily qualify the example to avoid using a black box...whether its 'taxable' income or 'marginal tax rate' etc. (which are actually implied). If you're saying something beyond this, then just say it.

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