Tag Archives: taxes

Revisiting Taxes

Posted by on June 21, 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 15, 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.

Taxing Marital Bliss 2012

Posted by on February 17, 2012 No comments

It’s time to look at the marriage penalty again for 2012,  although I am happy to report it won’t be affecting me any longer.  For the rest of you, let’s see how much you’re paying to be married.  Last year, I posted about this and it had gotten worse.  Taxes are a huge debate right now in political circles.  This never seems to get much attention though.

2010 Taxes

Filing Single Status

10% on income between $0 and $8,375
15% on the income between $8,025 and $34,000; plus $837.50
25% on the income between $34,000 and $82,400; plus $4,681.25
28% on the income between $82,400 and $171,850; plus $16,781.25
33% on the income between $171,850 and $373,650; plus $41,827.25
35% on the income over $373,650; plus $108,421.25

Married Filing Jointly or Qualifying Widow(er) Filing Status

10% on the income between $0 and $16,750
15% on the income between $16,750 and $68,000; plus $1,675.00
25% on the income between $68,000 and $137,300; plus $9,362.50
28% on the income between $137,300 and $209,250; plus $26,687.50
33% on the income between $209,250 and $373,650; plus $46,833.50
35% on the income over $373,650; plus $101,085.50

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

So the 25% married tax bracket ends at an equivalent income of $69,675, whereas the single bracket continues on to $83,600, a difference of $27,850.  That means you will be entering the 28% tax bracket almost $28k earlier than when you were single.  So, if you and your spouse make between and $69k and $83k each, you’re getting the penalty.  Last year, the range was $66k to $78k.  The gap has gone from $12k to $14k.  This is about $2k worse than last year.

If there’s a silver lining at all, it’s that the tax brackets are using higher numbers, but salaries haven’t seemed to go up at all, so it’s possible you could be in a lower tax bracket and pay less taxes.

7 Reasons

Posted by on February 10, 2012 No comments

I read a recent article with 7 reasons why we’ll always need cash.  It was less than convincing.  Some rebuttals for the article’s arguments:

You need cash when dealing with the smallest businesses.  These smallest businesses need to understand that being cash-only is limiting their customer base and inconveniencing the customers they do have.  They need to accept that CC processing fees are a cost of business and set their prices accordingly.  If they cannot compete, they must re-evaluate what makes their product, service, or location advantageous. If they don’t have a reason to be advantaged, they will not stay in business.  This is why they are the smallest.

You should live off cash when you have a tight budget.  I disagree with this.  The worst spenders will simply run through all their cash and wonder, “Where did it all go?” and they won’t know.  The answer is to use a credit card or debit card and log every receipt every day in financial software, whether it be Mint.com, MS Money, or (ugh) Quicken.  No one save cash receipts, if they even get one.  Then, once logged, you need to look at the numbers in front of your face and think about them.  At the end of each month, run the reports that show where the money goes.  Knowledge is power.

You’ll need cash when technology fails.  The example given is paying via phone NFC, but the article ignores that credit card processing is much more robust.  There’s a difference between BK saying “our credit card machines are down” and your mechanic saying the same.  In the first case, you just drive down the road to McD’s.  In the second case, there will be a manual “knuckle-buster” machine to process your card.  If a business wants (and deserves) your money, they will have a manual way to get it.

You need cash in case of emergency.  This one is kind of hard to dispute, especially seeing how people love taking advantage of others in trouble.  However, emergency doesn’t mean you are helpless.  You have options available to you.  All you have to do is ask if they take credit cards.  If not, move on.

You need cash when you need to remain anonymous.  The article uses a quote that explicitly says “maybe as a way to avoid taxes”.  I shouldn’t need to give a rebuttal.

You need cash when you depend on tips. The article again suggests that cash is good for misreporting income for taxes.

You need cash for the homeless.  This is because you can’t hand a credit card to a homeless person and have them charge you a couple bucks.  And supposedly also because most charities don’t accept cards when they are out on the street.  However, it is possible to donate through a website or PayPal.  And if you really want to help the homeless, buy them a meal or give them a blanket or clothing.

So overall, it’s not so much a list of reasons why we’ll always need cash, but more of a list of weak excuses why we haven’t completely gone cashless.

Warning: Political Topics Inside (Gas Mask Recommended)

Posted by on August 13, 2011 No comments

On my way to dinner tonight, I found myself thinking of a few political issues.  Just some unanswered questions that run through my head that I don’t care to really know the answer to.  Well, I kind of care about the answer, but I don’t think the people that profess to have the answer are objective enough to have an unbiased answer.  Such is the current political climate where no one trusts anyone else.

Anyway, I was thinking about left vs. right and how the right always accuses the left of overspending on social programs.  They’re too expensive, they always get more expensive.  Doesn’t anyone consider that there is a growing population?  It would make logical sense that if the population is growing, the cost of providing social services for that population will grow as well.  Solution: we need less people.  Welcome to my soapbox.

The other argument is that social services make people dependent on government.  The right claims that they want all people to be independent and self-supporting.  Well, not really.  They want people to be just as dependent on government, too, but instead of offering social services, they offer security.  And how is that benefit sold?  Through fear.  Fear of anything and everyone.  It used to be fear of external sources: communists, Islamic  radicals, Chinese superpower.  That’s been supplanted by fear of internal sources: your fellow Americans.  So to summarize, you can get your shackles in your choice of color: red or blue.

But the original point of my post was not intended to be political, it just ended up that way because I was thinking about the stalemate on the debt ceiling and how our government needs more revenue to support the left’s social services and the right’s defense/offense initiatives.  The best way to do this is to make sure everyone pays taxes.  The best way to do that is by enacting the FairTax.  When I hear that there is a way to make drug dealers and illegal under-the-table laborers pay taxes, I’m fully in support of it.

The FairTax has been stalled many times and I suspect quite a bit of it is because of the enormity of change it involves.  Much like any huge undertaking, like converting to electric vehicles, it’s a balance between building the infrastructure and building the products.  In this case, the product is the FairTax, and the infrastructure is how to capture and report that revenue.

So, how much closer could we get if someone like Amazon made a press release saying “our website code is ready to support the proposed implementation of the FairTax.”  And a month later, EBay/PayPal announce their sites are ready to go once it is enacted.  If these two major shopping companies embrace and proactively  adopt this concept, it could put pressure on other companies to be prepared, just in case.  Then when most everyone is ready to handle the change, it’s a tacit acceptance of the change itself.

And isn’t that a wonderful reversal: having businesses tell the government how they want to handle revenue reporting?

Death and Taxes and Marriage

Posted by on February 13, 2011 1 comment

These are some things always dear to my heart.  Let’s see how the marriage penalty works out for 2010.  The marriage penalty is when you get bumped to a higher tax bracket because of your combined income, where if your income was not combined (i.e. single), you’d be in a lower tax bracket.  Obviously this is more for DINKs and working professionals.  There’s plenty of cases where one’s higher income can be strategically lowered by a non-working or low-earning spouse.

Just as a disclaimer, all of these values are taxable income (one step beyond adjusted gross income and two steps beyond earned income), even when I talk about how much someone makes a year.  As we know, there are many ways to reduce that number including 401k/IRA contributions, and other pre-tax deductions.

Back in 2008, it worked out like this, using the tax rates from that time:

2008 taxes

Filing Single Status

10% on income between $0 and $8,025
15% on the income between $8,025 and $32,550; plus $802.50
25% on the income between $32,550 and $78,850; plus $4,481.25
28% on the income between $78,850 and $164,550; plus $16,056.25
33% on the income between $164,550 and $357,700; plus $40,052.25
35% on the income over $357,700; plus $103,791.75

Married Filing Jointly or Qualifying Widow(er) Filing Status

10% on the income between $0 and $16,050
15% on the income between $16,050 and $65,100; plus $1,605.00
25% on the income between $65,100 and $131,450; plus $8,962.50
28% on the income between $131,450 and $200,300; plus $25,550.00
33% on the income between $200,300 and $357,700; plus $44,828.00
35% on the income over $357,700; plus $96,770.00

If a couple each make between $66k and $78k and they each file single, each are taxed at 25%. If they file jointly, they are bumped to 28% because their sum income is over $131k.   In this case, it makes financial sense to remain single.

This terrible loss of money occurs because of the quicker jump from 25% to 28% for married filers.  The 25% bracket ends $26,250 sooner when you are married.  Why?  Who knows.

So to figure out who gets screwed, you look at the 25% tax bracket upper bound for both single and married, because that’s where it becomes unequal.  Divide the married tax bracket value by 2 as if you were single.  That comes out to $65,725 (or $66k) and the single upper bound is $78,850 (or $78k, estimating is fine when dealing with these concepts).

How have things changed in two years?

2010 taxes

Filing Single Status

10% on income between $0 and $8,375
15% on the income between $8,025 and $34,000; plus $837.50
25% on the income between $34,000 and $82,400; plus $4,681.25
28% on the income between $82,400 and $171,850; plus $16,781.25
33% on the income between $171,850 and $373,650; plus $41,827.25
35% on the income over $373,650; plus $108,421.25

Married Filing Jointly or Qualifying Widow(er) Filing Status

10% on the income between $0 and $16,750
15% on the income between $16,750 and $68,000; plus $1,675.00
25% on the income between $68,000 and $137,300; plus $9,362.50
28% on the income between $137,300 and $209,250; plus $26,687.50
33% on the income between $209,250 and $373,650; plus $46,833.50
35% on the income over $373,650; plus $101,085.50

Well, for one, the gap has gone from $26,250 to $34,550, so many more people are going to be affected.  Great.

Using the simple formula explained above, a couple – each earning between $68k and $82k – will get bumped into the 28% tax bracket.  That’s a $14k range, compared to a $12k range back in 2008.

What does this mean in real dollars? If you make $68k and file single, your tax obligation is $13,188.  If a couple each earn $68k, combined to $136k, their married tax obligation is $30,389, or $15,194 each.  This is a loss of $4,000 just for being married.

Let’s look at the high end.  If a couple each earn $82k, filing single costs them each $16,688.  Filing jointly, their tax bill is $39,630, a loss of $6,200.

I’ll reiterate, these number are all taxable income numbers. If you’re resigned to being in the 28% bracket, don’t bother worrying.  But if you have the chance to increase your deductions to get yourself into the 25% bracket, don’t let yourself get pushed back up and lose thousands for the privilege of being married.

Snow more taxes!

Posted by on March 22, 2008 No comments
Yup, Hoss’s was good.  That completes the gauntlet of food places I need to experience.  But that success was dampened by something I haven’t seen in years: snow.  And a pretty decent bit of it.  A few inches, I’m guessing.  By the time I hit the road this morning, it will be clear, and it wasn’t sticking on the roads by the time I got back last night.
It dawned on me why there probably aren’t any tolls on that stretch of turnpike I drove the other day.  It is a connector between one of the major interstates and the road to the airport.  It would make sense to not charge airport users a toll to use the most expedient route to the airport.  Wait a minute, no it wouldn’t.  This is America.  You have to pay to get an improved experience.  This state gets more weird every day.
Another weird thing noticed while travelling in a neighbor state (The State of Beautiful Women): there’s no sales tax on fast food.  What kind of incentive is that?  No tolls, no taxes, I don’t get it.  Visitors like me pay these fees because we don’t have much choice.  If these states are making up the lost revenue from these tax breaks through city/county/state taxes, they’re biting the hand that feeds them.  My (albeit small) savings at Wendy’s and on the road is being subsidized by the residents of the states I’m visiting.  Your pain is my gain.  Thank you.  That kind of adds another perspective to "It’s a nice place to visit, but I wouldn’t want to live there."

Fast food on the “free”way

Posted by on March 20, 2008 No comments
Ahhh.  It’s good to get what you want.  Tonight I wanted Roy Rogers.  I wanted Roy Rogers a few nights ago, but apparently that location was closed.  Or whatever.  That was an interesting, pointless drive.
So now Roy Rogers might be almost exclusively on the turnpike where I’m at.  That means money.  I’m paying money to go to a place that will feed me fast food at an amazingly high price (over ten bucks), then pay to return.  That’s a good business practice.  Why aren’t there more obsessive junk food lovers like me out there?  I guess they’re either broke or dead.
But returning to turnpikes, tonight was different.  I got on the highway and wondered "where’s my ticket?"  Where I’m at has a ticket-in, pay-to-leave system.  Well, I haven’t been here a while, so maybe they converted it to a pay -as-you-go system.  That would suck.  So I drive about 10 miles and pass an exit.  No toll booth.  Oh hey, there’s Roy’s… on the other side of the road.  Ok, I might have a rest area on my side coming up. … No, another exit.  Next exit, I’m turning around.  The next exit says "Toll Road".  Great.  Now, I have to pay to get off, then pay to turn around.  But how do they know where I got on at?  I take the exit – no toll booth.  That was a free trip.  I turn around and head back.  That’s going to be free too!
So I got to drive 40 miles on toll roads for free tonight.  And although I did spend over ten dollars for fast food – which could of been a better experience (I didn’t go on an empty stomach, so I had to force some of it) – I think the night turned out pretty well.  So I wonder who’s paying for these roads…
I’ve got one more food place to hit while I’m here.  I hope it’s good too.