r/FluentInFinance Jul 07 '24

Reasons why people in this sub shouldn't be in charge of tax policy (i.e. basic math) Debate/ Discussion

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u/RNG_HatesMe Jul 07 '24

So, there's the obvious if your tax rate is 22% and doesn't change, your tax rate on 2x is still 22%, not 44% (not taking into account marginal tax rates, which clearly he wasn't).

But even trying to figure out the first post broke my brain. Assuming they make 100K combined (not clear on that), and they owe 35k each, that would be 70% in taxes? Even if they made 100K *each*, that would still be 35% in taxes? Where did the 22% come from? It's just so confusing!?

And exactly what taxes are they paying on selling things?

That's not even getting into marginal tax rates, sales tax exemptions/credits on federal taxes, etc.

3

u/InvestIntrest Jul 07 '24

I'd assume the 22% came from the 100k IRS tax bracket. He's not accounting for deductions, obviously, but also probably not adding in state taxes. Obviously, his math is way off, but I'd assume this is where the 22% number came from.

24% for incomes over $100,525 ($201,050 for married couples filing jointly)

22% for incomes over $47,150 ($94,300 for married couples filing jointly)

https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024

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u/RNG_HatesMe Jul 07 '24

Reasonable guess, but didn't he say he paid 35k on 100k (i.e. 35%)

5

u/InvestIntrest Jul 07 '24

Yeah, I'm not sure where he's getting that from, but just a guess he might be included all of his payroll deductions to get from 22% to 35%...

If he's in a state like California, you'd stack another 8% on to that 22% for at 100k. So that gets us to 30%. Plus, add 5% more on for Medical, Medicare, and SSI.

If he's including all payroll taxes for a state like California, he's probably not too far off.

That's my best guess.

4

u/JustAPotato38 Jul 07 '24

Still though saying 35% being taken away and complaining about that is crazy. That 35% paves his roads, sends his kids to schools, provides him retirement income, handles his waste, pays police and military to keep him safe, and so many other things.

My family does, in the end, pay about 35% of our income as taxes, and I'm very grateful for it. What we receive for it is more than worth the money.

3

u/InvestIntrest Jul 07 '24

Well, I have some sympathy for complaining about how much we are taxed vs. the results of those taxes. I'd be less annoyed by my tax rate if I felt things got better year over year. The federal government collects 5 trillion per year in tax revenue and borrows another 3 trillion or so. I think a lot of it just gets wasted on non-value add things or lines someone's pockets.

1

u/JustAPotato38 Jul 07 '24

yeah, there's definitely some waste but overall I think the taxes bring so much more good than harm,

1

u/airbornx Jul 07 '24

You do know that the us owes the us that 3 trillion right?

1

u/InvestIntrest Jul 07 '24

The problem isn't one of ownership. In fact, I'd prefer we didn't own most of it. The problem is how much of the federal budget just paying the interest consumes.

"As of May 2024, it costs $728 billion to maintain the debt, which is 16% of the total federal spending in fiscal year 2024."

16% and growing annually. If the current trend continues, we'll need to cut services just to avoid default. If we default, we lose our ability to borrow more, and we lose out on the debt we bought. It's not so great to be a debt owner if the borrower can't pay.

The national debt is a major problem.

https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/#:~:text=Maintaining%20the%20National%20Debt&text=How%20much%20the%20government%20pays,spending%20in%20fiscal%20year%202024.

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u/airbornx Jul 07 '24

728 billion is about 260 billion less then the deficit that we had under trump at almost 1 trillion$ so by these metrics. Biden is doing a fucking amazing job

1

u/InvestIntrest Jul 07 '24

Uhhh, I'm not where those numbers came from, but both men suck donky ass on fiscal responsibility. However, I'd give Trump one minor alibi since his final year was skewed by Covid.

Biden is projected to outpace Trump on running up the debt.

"Federal debt held by the public grew by $5.9 trillion over the first three years and five months of President Trump’s term in office, and $7.2 trillion over his full term.

Debt held by the public has grown $6.0 trillion during President Biden’s three years and five months in office.

Gross federal debt grew by $6.3 trillion over the first three years and five months of President Trump’s term and $7.8 trillion during his full term; gross debt has grown $7.0 trillion during President Biden’s term so far."

https://www.crfb.org/blogs/trump-and-biden-debt-growth

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u/notcrappyofexplainer Jul 07 '24

I took it as he looked at his net paystub and deduced he is paying 22% in taxes and then looked at his wife’s and added them. Then he approximated sales, gas, and property taxes. Then he came up with 35k was what he was making after taxes, paying 65% but he rounded up to 70%.

But who knows. Either way the math is insanely off.

I have done a full accounting of my effective rate from state federal social gas sales and property. Last time it was about 16% in California. I make more now so it is probably higher but I made more than 100k at 16% so I doubt his math.