- quote -

Has anyone come up with the full number of marginal rates in
the federal income tax? (This includes all the ranges where
various deductions go away, so there are at least a dozen,
and I think a lot more.)

Seth

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- quote -

And I suppose AMT is just chopped liver?

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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I find the federal income tax percentage to be an interesting
number. Mine has fallen over a quarter percentage-wise over
the past 15 years despite a doubling of income. This is
mainly due to Clinton's gains tax halving and Bush's earned
tax cuts. Yet my total tax percentage- federal, social
security, state, and property - has remained fairly constant
that same term, even while living in states as diverse as
California and Texas. The biggest tax increase has been in
social security, because it has built in escalators. That
is followed by property tax which mirrors real estate values.
What "one hand giveth the other taketh away".

Dick

ned72[at]webtv.net wrote:

- quote -

There are 6 income tax brackets built into our "progressive"
personal income tax system. The CPA was probably referring
to one of the 6 tax brackets. If you are in the 28% tax
bracket, then any increase or decrease of taxable income
will either cost you or save you 28 cents of a dollar. The
link below will show you the 2006 tax brackets for each
filing status. http://www.smbiz.com/sbrl001.html#pis06

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<ned72[at]webtv.net> wrote:

- quote -

He was talking about the marginal rate. This is the rate
that would apply to the next dollar of income you would have
receive (provided that next dollar did not put you into a
higher bracket).

The tax divided by taxable income (i.e. your 19%) is what is
called the effective rate.

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<ned72[at]webtv.net> wrote:

- quote -

It's the _marginal_ rate: if his income increased by $100,
his income tax would increase by $28.

Seth

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See this link:

http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

and go to the end.

I suspect that the discussion was about *marginal* tax
rates, i.e. if your neighbor made another dollar, that
dollar would have been subject to 28 cents in tax. You are
comparing it to your average tax paid, which is a different
number.

More knowledgeable heads will probably post answers with
more details.

Hank Murphy
speaking only for myself

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ned72[at]webtv.net writes:

- quote -

You've just computed the "average tax rate", which while it
might have some meaning looking backwards, doesn't provide
any meaningful information on how to behave, invest, etc.

- quote -

He's talking about the tax rate experienced by the next dollar
of income. If you're in the 28% bracket, that means if your
income increases by $100, your tax will increase by $28. A
related term for this is "marginal tax rate".

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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<ned72[at]webtv.net> wrote:

- quote -

The term Tax Bracket is usually applied to the Marginal Tax
Bracket.

That is the percent of tax you will owe for each dollar of
additional income.

If you made $100 more income and increased your tax bill
$28, you are in the 28% bracket.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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While speaking to a neighbor about paying Federal income tax,
he mentioned that his CPA had told him he was in the 28%
bracket. This surprised me so I looked at my tax return (that
I prepare myself) and when I compare the tax for the year with
the adjusted gross income, it was about 15% when compared to
the taxable income, it was about 19%. I'm curious what the
CPA was talking about -- would it be the ratio of the tax owed
to the Adjusted Gross Income, the ratio of the tax owed to the
taxable amount, or what?? Anyone have an idea???

John

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