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Tuesday, August 23, 2011

Let's Get Something Straight

There is an incredible amount of babble about income taxes, most of it is crap.  So let's get something simple correct.

Let's start with your neighbor who has an Adjusted Gross Income of $1,000,000.  There were 237,000 of them last year.  Because most of his/her income comes from capital gains (a realistic assumption), he/she will pay $150,000 in income taxes because the rate on capital gains is 15%.

You had an Adjusted Gross Income of $100,000.  (Congratulations.  That makes you a middle class American.)  You will most likely pay 17% of your income (a realistic assumption), so you will pay $17,000.

It is clear that your neighbor pays MORE income tax than you do.  In fact, the majority of income taxes are paid by your neighbors, and that is a fact.

But he/she paid a SMALLER portion of his/her income.  Is that fair, or not?  You decide.  This simple example is EXACTLY what the Washington babble is about.

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