50% is super high in the US, generally speaking, especially for income in that range. The person may be overpaying in taxes, or is including other stuff in 'taxes', or has an incredibly high local/state tax rate. A single person with no dependents earning $72k/year would, generally speaking, have a federal tax burden of around $8900 - 12%.
For a single person, you'll hit that tax bracket after more than $500,000 in income. This is an absolutely enormous amount of money - roughly 10x the median income. I have absolutely zero problem with income beyond this amount being taxed at 50%.
I make around $600,000. My effective federal tax rate is in the low-mid 20s. I'd have to make way way way more money for my effective federal + state rates to approach 50%.
This person is ultra high income if their marginal tax rates are 50%. They didnt give numbers but using an online calculator [0] and assuming a high tax state (CA), you need to be above $500k a year income to hit 50% marginal rates. That is also assuming you are single, a married person would need a combined income nearly twice that to hit 50%.
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.
If you're single in the US, you have to earn over $578,125 taxable dollars in a year to have a single dollar of you income taxed at the highest rate, 37%. So considering only federal taxes there is no way most of anyone's income goes to tax in the US. The highest state tax bracket in the US, a quick search tells me, is 13.3%. In California, any dollars of taxable income you earn over $1 million gets taxed at this rate. So if you earn $2 over this threshold, the majority of these two dollars, rounding up, will be taxed. If you manage to earn enough above this threshold for the extra 0.3% tax to make up for the lower tax brackets you crossed on the way to this threshold, you are a pretty rare individual indeed.
> The personal tax rate is banded, so only your income _above_ a certain amount is taxed at [...]
Same for the US. Isn't every country like that? The US's highest federal income tax rate is 37%, and that applies to income over $578,125 for single people and $693,750 for married couples. This isn't counting state taxes (0-12.3% depending on the state) and FICA taxes (2.35% at that income level).
I get that 50% is a nice round number, but what's the moral or reasonable significance of that?
Meanwhile, you're looking at top marginal rates. That's not the total rate. A single person making $500k a year has a total tax rate (federal plus state) of 41%. It gots up to 46% at $1,000,000/yr.
And the rate goes down if they marry, have kids, etc.
Ya, someone single making $150k/year is paying an effective state income tax rate of 7% (and an effective federal income tax rate of 17.82%). But I get the very conservative simplifications parent was making to make their point.
What's the effective tax burden on a self-employed single person making $300k in, say, Massachusetts (5% income tax; not exactly the highest in the US)?
Based on 2020 US tax brackets, standard deduction, including the both sides of FICA (capped at the social security cap for the social security part) and the medicare extra tax they are paying, I am ending up at ~37-38% effective (not marginal; marginal is 43.8%) tax or so. This individual would in my mind be excused for claiming that they pay "40% in income taxes" and is not making "millions" (though obviously is not suffering financially).
My wife and I are high income earners in the state of California. Looking at our 2019 tax returns, I see our effective tax rate was 29%. Property taxes were 4.5%. So, together a smidge below 34%.
To get to a 50% tax burden, the remaining 66% of our income would have been taxed at a ~24% rate. Of course that didn't happen since we spent on things like our 401(k) and food (both of which are not taxed), plus our cash savings.
I stand by my statement that any high-income earner paying 50%+ in taxes needs to get a better accountant.
For (single) self-employed people making between ~$85k and $137k, the marginal federal tax rate they face is a little under 40%, with 24% from your link, ~12% from Social security, and ~3% from Medicare. This excludes the effect of phaseouts of various deductions (eg, student loan interest), which can easily drive that higher while remaining within the context of federal taxation only.
The federal income tax isn't the only income tax. There are also state, local, FICA, and medicare taxes. Add those in and someone with a $100K salary ends up in that 30-40% range.
This is misleading. Top tax rates can be as high as 50.3%, but the parent comment says they are paying 51% of their earnings. These are two different things, because of tax brackets. I was both taxed a marginal rate of 48.3% and had an effective tax rate of 40.6% (CA resident).
It really depends on a lot of tax factors & health insurance but in the US your take home on 80k would be higher than 48k. An example single person with no kids would have 12400 in federal income tax and 6k in social security/Medicare taxes. They’d also pay the employee portion of their health insurance premium which can be anything from 0 to a couple hundred per month but is paid pretax.
The highest federal tax rate in the US is 37% and that’s only taxed on income over 518k.
You're only paying 35% in US federal taxes if you're making over 400K a year. Someone making $100K to $150K is in the 28% bracket.
And you're probably only paying 10% in state tax if you live in California. Most other states' income tax are around 5 or 6 percent, and some are at zero.
4.25% in payroll taxes (Social Security and Medicare), federal income taxes range based on how much you make and how big your family is. Large family making little, 0%; Single making $120k, your highest marginal rate is 28% but it will average out to an effective rate around 17% in my experience. State taxes range from 0% in Texas to what the other posts say about California.
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