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Tax Rates in History
Topic Started: Apr 17 2011, 01:30 PM (985 Views)
KlavierBauer
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HOLY CARP!!!
Al and Jon - thanks for the insight.

I guess I still get held up on reading "Individual Income Tax" as separate from "Payroll Tax."
I pay-as-I-earn like most, and I file an Individual Income Tax return at the end of each year. Sometimes I pay some more, sometimes I get some back - when I was self employed I had no payroll tax of course, but now I do. Isn't my payroll tax what pays my individual income tax? Or are you limiting "payroll tax" to only include FUTA & FICA?
Is Individual Income Tax necessarily a non-payroll tax, or are we assuming that on this graph, as it seems (based on my limited knowledge), that one is part of the other, rather than a separate entity.
"I realize you want him to touch you all over and give you babies, but his handling of the PR side really did screw the pooch." - Ivory Thumper
"He said sleepily: "Don't worry mom, my dick is like hot logs in the morning." - Apple

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jon-nyc
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Cheers
In tax speak people refer to social security and medicare taxes as 'payroll taxes' as distinct from income taxes. Of course payroll taxes are just another type of income tax, but nevertheless that distinction is made.

I'm certain that is the distinction represented in Al's graph.
In my defense, I was left unsupervised.
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KlavierBauer
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HOLY CARP!!!
That's what I was trying to pin-down.
Everything I can find (reading wise) on "payroll taxes" includes income tax witholding (state/federal), FUTA, and FICA, rather than just FICA (including wiki, about.com, alllaw.com, and any other "definition" of payroll taxes I've found).

So we're assuming this graph doesn't include those?
"I realize you want him to touch you all over and give you babies, but his handling of the PR side really did screw the pooch." - Ivory Thumper
"He said sleepily: "Don't worry mom, my dick is like hot logs in the morning." - Apple

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jon-nyc
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Cheers
The distinction I'm describing is quite commonly made although very imprecise and sloppy.
In my defense, I was left unsupervised.
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jon-nyc
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Here's the heritage foundaiton using more precise language, but the data match Al's graph.

http://www.heritage.org/budgetchartbook/federal-revenue-sources

In my defense, I was left unsupervised.
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big al
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Bull-Carp
I suspect part of the confusion (I'm prompted to this thought in part by your comment regarding self-employment, KB) is the tendency to equate payroll taxes with tax withholding. Your withholding in many (most?) jurisdictions, includes federal income tax, FICA, Medicare, and often state and local income taxes, state unemployment insurance, and sometimes other taxes (we have a local wage tax that is a fixed amount per pay period up to a maximum in Pennsylvania). There is a tendency to call all this income tax because most of it is income based, but that's not a consistent terminology across the board as you have noticed.

Big Al
Location: Western PA

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JBryan
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I am the grey one
The line item on your pay stub "FICA" is what is commonly referred to as payroll tax. The withholdings are state and federal income taxes.
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ivorythumper
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I am so adjective that I verb nouns!
Axtremus
Apr 18 2011, 07:56 AM
This graph shows effective tax rates paid by people of different income levels over time:

Posted Image

Source: http://motherjones.com/politics/2011/04/taxes-richest-americans-charts-graph

Note that all dollar figures have been inflation-adjusted to reflect 2010 dollars.
What happens in the over $1M to the billion range?
The dogma lives loudly within me.
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KlavierBauer
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HOLY CARP!!!
I understand what you're all saying - I just found it interesting that each "source" I read, looking for a definition of "payroll taxes" included Federal, state witholding (income tax), FICA, FUTA, etc. - with no distinction; this gelled with what I've always understood in that context - that "payroll taxes" includes all of the taxes witheld from my paycheck - income tax, social security, medicare, unemployment.
That there is another meaning for the same phrase is just a little confusing - when FICA is synonymous with "payroll taxes." I understand that income tax and FICA/FUTA are different things - but my income tax *is* paid largely by my state/federal witholding. I wasn't confused as to which part is considered "income tax."
"I realize you want him to touch you all over and give you babies, but his handling of the PR side really did screw the pooch." - Ivory Thumper
"He said sleepily: "Don't worry mom, my dick is like hot logs in the morning." - Apple

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Axtremus
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HOLY CARP!!!
KB,

When you were self-employed, you (should have) paid something called the "self-employment tax." That tax is the equivalent of "payroll tax."

For "payroll tax," it works like this: Suppose you are employed by someone else and your nominal salary is $100k in a year, then 6.2% of that is withheld by your employer ($6,200), and your Employer kicks in another 6.2% ($6,200). For Medicare, 1.45% of your nominal salary ($1,450) is withheld by your employer, and your employer kicks in another 1.45% So the total (employer's portion and employee's portion) of Social Security and Medicare taxes is 6.2% + 6.2% + 1.45% + 1.45% = 15.3% of your nominal salary.

For "self-employment tax," it works like this: Suppose your self-employment income is $100k in a year (say you operate a one-man business as a piano tech, subtract your legitimate piano tech business expenses from your piano tech revenue and that would be your self-employment income; here, we use $100k as example), 15.3% of that ($15,300) would be your "self-employment tax." Essentially, you are your own employer and you are also the employee, so you pay both the employer's and employee's portions of Social Security and Medicare taxes.

In that sense, the "self-employment tax" is the equivalent of the "payroll tax."

Notice I didn't include things like unemployment insurance/tax and disability and worker's comp and such ... these vary by state laws the bulk of these go to the state (not the federal government) anyway. Besides, self-employed people usually don't get to claim unemployment benefits, so self-employed people usually don't have to pay unemployment insurance/tax. (The is a small bit of unemployment insurance/tax that goes to the federal government, but it's a very low rate with a very low income cap, so it's really down in the noise.)
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Axtremus
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HOLY CARP!!!
ivorythumper
Apr 19 2011, 09:31 AM
Axtremus
Apr 18 2011, 07:56 AM
This graph shows effective tax rates paid by people of different income levels over time:

Posted Image

Source: http://motherjones.com/politics/2011/04/taxes-richest-americans-charts-graph

Note that all dollar figures have been inflation-adjusted to reflect 2010 dollars.
What happens in the over $1M to the billion range?
I would read that top yellow line as capturing all those who make $1million or more per year.
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KlavierBauer
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HOLY CARP!!!
Ax: Yes - as I was self employed I get this perfectly clearly.
I also payed income tax, as I pay now (out of payroll).

I guess I'm not saying something clearly - so I'll leave it alone.
"I realize you want him to touch you all over and give you babies, but his handling of the PR side really did screw the pooch." - Ivory Thumper
"He said sleepily: "Don't worry mom, my dick is like hot logs in the morning." - Apple

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jon-nyc
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Cheers
Axtremus
Apr 19 2011, 12:11 PM
I would read that top yellow line as capturing all those who make $1million or more per year.
As wage income. But most people in that income range have much or all of their income in dividends and capital gains. Thus you see the regressivity at the tippy top of our society.

And there's also professions that have cut a special deal with congress. Or really, bought a special deal from congress. John Paulson, for example, makes over $1B per year running a hedge fund. He pays 15%.
In my defense, I was left unsupervised.
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John D'Oh
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MAMIL
He must be saving it for a rainy day.
What do you mean "we", have you got a mouse in your pocket?
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