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The Daily Signal
If You’re a
Middle Class Taxpayer Who Gets a Raise, Government Will Take This Much
Patrick Tyrrell
March 24, 2015
How high is the marginal tax rate on each additional dollar the average
American earns? In other words, if you got a raise of one dollar, how
much of that dollar would be taxed away?
A middle-class taxpayer’s additional income (when a single person earns
more than $37,450 a year) is subject to a 25 percent federal income
tax. Then there are the federal Social Security and Medicare payroll
taxes totaling 15.3 percent in 2015.
And then there are state taxes.
State income taxes for single individuals on the next dollar of their
annual earnings over the $37,450 threshold in 2015 range from
none in Alaska, Florida, Nevada, South Dakota, Texas, Washington and
Wyoming to as high as 7.05 percent in Minnesota, 7.4 percent in Idaho,
7.9 percent in Hawaii, 7.95 percent in Maine and 9 percent in Oregon.
Put that all together and you have marginal tax rates on the middle
class approaching 50 cents on the dollar.
High marginal tax rates are a disincentive to work and be productive.
If middle class taxpayers received the full fruits of their labor, more
of them could afford to start a business or send someone to
college—both decisions that would lead to a more dynamic economy.
Do taxpayers get benefits from government spending? Sure. But there are
far too many cases of tax dollars frittered away on corporate welfare
for companies that end up going bankrupt, or wasted on federal programs
that fail to accomplish their goals.
The answer to our oversized and incomprehensible tax system is a
complete overhaul to make it simpler, fairer and more rewarding of hard
work.
At this time of year especially, that would be welcome.
Read this and other articles at The Daily Signal
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