patrick.net

SiO2 says

And CL, you are right

Ha. The old "broken clock" syndrome. :)

AMT is an issue for FAMILIES in the 150K to 250K range? I'd think single filers maybe.

CL says

Most people confuse the statutory rate with the amount they are taxed (not even understanding the marginal part), so they are surprised at how little they are taxed.

Both your marginal and your average (effective) tax rates are important for different reasons. When deciding whether or not it's worth buying something or working overtime, it's your marginal rate you should consider. When budgeting, it's your effective rate you should consider.

SiO2 says

And CL, you are right, many people misunderstand marginal vs overall rate. That's why you see TEAers talking about how they pay 50% of their income in tax. Realistically a very high income person could get close to 50% marginal rate including state: 35% fed + ~1.5% medicare + 10% CA = 46.5, but not quite 50%

you sit down and add up all the other taxes you pay that comes out of your current earnings.. sales tax, property tax for individuals.. for many who have their own business, they also pay the additional self employer tax. It all adds up!

Dan8267 says

Both your marginal and your average (effective) tax rates are important for different reasons. When deciding whether or not it's worth buying something or working overtime, it's your marginal rate you should consider. When budgeting, it's your effective rate you should consider.

Yeah. I just mean that most Americans (I assume) think that once they hit say a 28% statutory rate that they are paying 28% on their income, not the "last dollar". So they don't know that their combined rate is much lower, since they are also paying 10% down in the lower bracket.