Every election year someone from the opposing party bring up tax returns, trying to play to the hardworking (and the not-so-hardworking, for that matter) taxpayers that the candidate has something to hide. Let’s be honest here, folks…we all want to keep as much of our hard-earned money in our pockets and will use whatever deductions we can to lower our taxable income. Same goes for anyone running for office. I, for one, wouldn’t want a candidate that wasn’t human, but I digress – I am not writing to speak about politics or even tax deductions. I want to explain a little about income versus taxes owed, and the misconstrued perceptions of the general public.
Federal Taxes Owed Fluctuates With Income
The IRS has tax brackets in place for varied incomes. We will use Married Filing Joint as an example. For instance, if the couple makes between $18,650 and $75,900 in 2017, they will be taxed an estimated $1865 plus 15% of the excess over $18,650, so although the tax bracket is the same, the couple who earns a combine income of $75,900 will owe $10,453 in taxes. That is $8,588 more than the couple earning $18,650. It is basic math. Someone in the same tax bracket with higher income still pays more taxes.
Now, let’s take a look at the high-end of the spectrum: If the taxpayers make over $470,700 in 2017, they will pay $131,628 + 39.6% of any excess over $470,700. Let’s say my husband and I make $632,578 dollars this year (insert my fantasy spending spree), we will then owe about $195,732 in taxes for 2017. Quite a hefty sum.
Bottom line: The “perceived” wealthy pay a higher percentage on dollars earned. How is that “unfair” to people who make less? It isn’t, in my opinion.
Source: https://taxfoundation.org/2017-tax-brackets/ for estimated tax brackets