Tag Archives: taxes

Revisiting Taxes

Posted by on June 22, 2018 No comments

For a few years, I used to do a post on taxes, specifically regarding the “marriage penalty”.  It was a rant post because I was married at the time and we were getting dicked over by this penalty.  Things have gotten a lot better in that regard lately (as in me getting divorced), so I stopped making those posts back in 2013.

I saw a post by someone who was complaining that the new tax laws were changing his taxes for the worse.  By using an estimating calculator, he had to increase his withholding rate, but was getting more back per paycheck.  It sounds like a strange con game, give me more and I’ll give you more.  And simply because of that weirdness, I got wondering how the marriage penalty shakes out under the new tax law.  So I went looking.

Here’s the surprise, there is no marriage penalty anymore (for the common person).  If you are a married filer, your tax table breaks at 2X the single income – at every bracket.  Except… if you make over $300,000 each.  Like I commented, not the common couple.

It would make sense that any tax “improvement” would offer a gain for normal income people and a proportionally higher gain for extraordinary income people.  That’s a gripe for another post.  The point of this post is that the marriage penalty is gone.

Just for retrospective kicks, let’s look at what could have been if we did not have the tax “reform”.  Looking at the 2017 tax brackets, as in all other years, the disconnect happens in the upper tier of the 25% bracket.  If you are single, you would be bumped to the 28% bracket at $91,900.  If you have two married people making $76,550 each, that couple will be taxed at 28%.  That is the marriage penalty – you are bumped to a higher tax rate sooner from your combined wages.  Said another way for clarity, if you and your partner made $77k each and were not married, you each got taxed at 25%.  Then you get married and with no change to your salaries, now you’re paying 28% in taxes.  And that sucks even harder if you get married later in the year, because your employer has been withholding taxes expecting you to be in a 25% bracket.  You will have less withheld when you do your taxes and learn you’re now at 28%.

You might think this new tax table is awesome, especially if you were previously hit with the marriage penalty, but it’s not better or worse, just different.  The marriage penalty primarily affects DINKs (dual-income, no kids), especially young professionals, and in these modern times, married gay people.  The tax system up to now has favored and encouraged one married member being a breadwinner and the other being a homemaker.  This high income of the breadwinner has no extra income from the homemaker and is able to utilize the full deduction of both people against one income.

So, now that the incentive is gone to have two people living under one income, all the people who structured their marriage in this way, on purpose, or by accident, or by default, they are going to pay more in taxes.  That could be the case for this post I read.

The Haves And The Have-Nots

Posted by on January 25, 2018 No comments

There’s something I want to bitch about.  It’s nothing new or profound or even really interesting.  It’s the issue with income inequality in America.

The people in charge of America recently made a change to the taxes applied to corporations.  They lowered the top tier from 35% to 21%.  This was promised intended to save a lot of money for businesses and help save jobs and keep business strong and profitable.  Then, recent news says that the corporation Kimberly-Clark is going to eliminate 5k jobs.  And even more recent news say that they are using the money saved from taxes to pay for the costs of downsizing their business, including the layoffs.  That doesn’t sound like the expected result that was sold to us.

For all the bitching that could be done on that specific case, what I want to focus on is the fact that when KC announced they were cutting jobs, their stock price went up.  This is a double-insult to the working class.  I am fortunate to have a 401k plan, but I am acutely aware that many do not.  And those people are not reaping any – ANY – of the growth that has been going on in the last decade.  And that really pisses me off.

Some people, who are oblivious to the pains of the working class, would ignorantly say, “All you have to do is put some money in the stock market and you’ll get the benefits.”  Sure, it doesn’t matter whether it’s a 401k, Roth IRA, or simple mutual fund.  They are correct.  But the part they ignore is “What money?!”

Wages aren’t going up for the working class.  Expenses are going up, though.  Think about that for a minute.  If there was some available money, that money could be growing.  But because there is none, there is no growth.  It has to be the most painful thing ever to see someone making only slightly more than you pull away in net worth because they have that small bit of extra income.  You either have money to invest or you do not.  And there is a world of difference between the two.

That’s my biggest sticking point is that corporations are holding back prosperity from their employees.  They are making changes that only enrich the already-established instead of considering how to enrich everyone. 

Somehow, we need to increase access for everyone to be able to take advantage of growth opportunities.  Increasing pay is the easiest, most direct way for that.  “But, the company will suffer because it’s an additional cost!  The stock price will drop!  My monies!”  But, with more people being able to put money into investments, the stock price will rise from the additional demand.  There is a common aphorism for this: “A rising tide lifts all boats.”

It’s not difficult.  All it takes is is a little less greed.

Shades of Taxes

Posted by on October 16, 2013 No comments

I recently watched a video on the dangers of “socialism.”  It was an animation and was intended to be humorous while delivering its message.  The illustration given was a classroom where it was announced that everyone would get the same grade, averaged from all the tests.  After the first test, everyone got a B, the next test, everyone got a D, the last test, everyone got an F.  This is how socialism works, apparently.

The problem with the illustration is that the subjects are of two distinct personalities: selfish and lazy, which is how anti-socialism people view the world.  You are either selfish and in it for yourself only, which is why you are a capitalist, or you are lazy and don’t want to do anything, which is why socialism is so great for you.

The world is so full of absolutes right now, it’s disgusting.  You are either Left or Right, Pro or Con.  And that designation, aside from having no variance, also has no subsets.  There will always be those that will fight for a cause and those that don’t care about it.  There will always be people who care about doing a good job and those who don’t see the point in it.

Here’s an anti-socialist viewpoint: why have garbage cans on the street?  Eventually everyone’s going to just throw their trash on the ground, because there’s no gain in using the garbage can.  All the effort of trying to keep the streets clean is wasted on those that don’t care, so why bother.  I mean, either you’re 100% for litter control, in which case you’d handle all of your trash needs yourself and have no need for government-subsidized garbage can entitlements, or you’re not, in which case the ground is your garbage can.

Flippant as it is, it exposes the hypocrisy of anti-socialists.  If it’s something they support, good, otherwise, fuck off.  These people want life to be a’la carte.  They want to pick and choose every single piece of their life experience.  So why not?

Yes, why not?  Everyone bitches and moans about their tax dollars going to pay for something that they hate.  So why not let them choose?  Why not?  I think we have enough diversity in America that everything would be funded as it’s needed.  You’d have your rich, educated types diverting their tax money to education programs, earth and hippie types allocating for environmental causes, farmers propping up agriculture subsidies, rednecks and bulletheads giving all their tax dollars to defense.  Despite all the stereotypes, it would all work out.  And you’d have normal people allocating some here and some there, balancing things even further.

So all this stuff about Congress budgeting and allocating and taxing and robbing people to pay Paul, it all goes away.  Each year, the income tax forms are collected and everyone has contributed a flat tax of 10%, 12%, 15%, whatever.  Everyone has indicated on their tax form whether they want their taxes spread equally or according to the category assignments provided.  You will actually have a tangible value assigned to the service, instead of “These people insist their service needs more funding.”

Married Bliss… with Taxes

Posted by on February 25, 2013 No comments

It’s time for the 2012 edition of Tax That Married Couple.  Let’s jump right in to the numbers.  For previous posts on this topic, check out the Taxes tag.  Here’s the tax charts for last year and this year:

2011 Taxes

Single Filer 2011

10% on the income between $0 and $8,500
15% on the income between $8,500 and $34,500
25% on the income between $34,500 and $83,600
28% on the income between $83,600 and $174,400
33% on the income between $174,400 and $379,150
35% on the income over $379,150; plus $110,016.50

Married Filer

10% on the income between $0 and $17,000
15% on the income between $17,000 and $69,000
25% on the income between $69,000 and $139,350
28% on the income between $139,350 and $212,300
33% on the income between $212,300 and $379,150
35% on the income over $379,150; plus $102,574

2012 Taxes (from page 105 of the 1040 instructions)

Single Filer 2012

10% on the income between $0 and $8,700
15% on the income between $8,700 and $35,350
25% on the income between $35,350 and $85,650
28% on the income between $85,650 and $178,650
33% on the income between $178,650 and $388,350
35% on the income over $388,350; plus $112,683.50

Married Filer

10% on the income between $0 and $17,400
15% on the income between $17,400 and $70,700
25% on the income between $70,700 and $142,700
28% on the income between $142,700 and $217,450
33% on the income between $217,450 and $388,350
35% on the income over $388,350; plus $105,062

Ok, as in all other years I’ve been doing this, the break happens between the 25% and 28% brackets.  When you’re married, you’d think you could stay in the 25% bracket until you collectively make $171,300 (which is double the upper bound of the 25% bracket), but no, you jump to 28% at $142,700.  That is $28,600 earlier.  Last year, the 28% bracket started $27,850 earlier.  It just keeps getting sooner and sooner.

The salary range for couples getting screwed this year is between $71,350 and $85,650, a range of $14,300.  That’s about the same as it was last year.  So if you and your new spouse are fairly successful and equal earners in that salary range, surprise and congratulations!  Why do gay people want this?

So all these years, I’ve been complaining about this marriage penalty, but there is a common belief that you pay less taxes when you are married.  The tax charts in the 1040 instructions stop at $100,000, so there is no easy way to visually compare a single person earning $50k or more against a married couple who each earn $50k or more.  So I wrote a quick program to calculate taxes using the single and married tax charts and ran a bunch of numbers through it.  Here’s the results:

image

Single Income is just what it sounds like.  Married Income is double that value, assuming both people making the same amount.  Single tax calculates the Single income against the single tax chart.  Married tax calculates the Married income against the married tax chart.  Married Tax as Single simply divides the total married tax in half, showing each person’s share of the married tax burden.  Premium per Person  shows how much more each person is paying for being married.

My plan was to find out at what point your taxes become lower when being married.  I wanted to make the point that it happens at an unreasonably high income level.  It turns out that the savings never happen.  After the tax rate split at about $71k, you pay more being married.  It’s not as much as I originally calculated, but still more.

In all my previous posts on taxes, I definitely exaggerated the impact of this marriage penalty, and because of the graduated tax chart, I was miscalculating its financial effect.  I regret that a little.  But with more in-depth research, I found that the actual situation isn’t all that much better.  The more income you make when married, the better off you are being single, starting at $71k.

I think I’ve now beaten this topic into the ground and I won’t bother doing these in future years unless something interesting happens with the tax code.