@ligasser @mattdm @unchartedworlds
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@ligasser @mattdm @unchartedworlds
The way most tax systems work is like this. There are different rates for different incomes and:
The more you make, the *more* brackets apply to you.
Let's say, 3 brackets:
Under $100 is 2%
$100.01 to $1000 is 5%
$1000.01 up is 7%If you make $1001.00 you pay:
100*.02 on the first 100
900*.05 on the next 900
1*.07 on that last dollar$47.07 total.
You only pay the highest rate on the money you make beyond 1000. It only applies to the last dollar.
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F myrmepropagandist shared this topic
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@ligasser @mattdm @unchartedworlds
The way most tax systems work is like this. There are different rates for different incomes and:
The more you make, the *more* brackets apply to you.
Let's say, 3 brackets:
Under $100 is 2%
$100.01 to $1000 is 5%
$1000.01 up is 7%If you make $1001.00 you pay:
100*.02 on the first 100
900*.05 on the next 900
1*.07 on that last dollar$47.07 total.
You only pay the highest rate on the money you make beyond 1000. It only applies to the last dollar.
@ligasser @mattdm @unchartedworlds
This is very simplified. But, it's the general idea and hopefully it's clear why there is never a case where someone would say "better not make one more dollar or you'll have less overall!"
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@ligasser @mattdm @unchartedworlds
The way most tax systems work is like this. There are different rates for different incomes and:
The more you make, the *more* brackets apply to you.
Let's say, 3 brackets:
Under $100 is 2%
$100.01 to $1000 is 5%
$1000.01 up is 7%If you make $1001.00 you pay:
100*.02 on the first 100
900*.05 on the next 900
1*.07 on that last dollar$47.07 total.
You only pay the highest rate on the money you make beyond 1000. It only applies to the last dollar.
@futurebird @ligasser @mattdm @unchartedworlds
So many people believe of they are bumped into a higher bracket, they will suddenly be taking home less than before. That the one dollar from the top of bracket A is better than one dollar into bracket B.
Perhaps this myth is perpetuated too convince people that being paid less is somehow better. -
@futurebird @ligasser @mattdm @unchartedworlds
So many people believe of they are bumped into a higher bracket, they will suddenly be taking home less than before. That the one dollar from the top of bracket A is better than one dollar into bracket B.
Perhaps this myth is perpetuated too convince people that being paid less is somehow better.@RyeNCode @ligasser @mattdm @unchartedworlds
I think they myth is kept around to make people think higher taxes for higher incomes are "unfair"
It also allows people who are in higher brackets to act like they pay the highest percent on their whole income ... when their effective tax rate is lower, often much lower once we talk about deductions and other exceptions.
"A family making just 200K has to pay a 40% in taxes!!"
No, they don't.
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@ligasser @mattdm @unchartedworlds
The way most tax systems work is like this. There are different rates for different incomes and:
The more you make, the *more* brackets apply to you.
Let's say, 3 brackets:
Under $100 is 2%
$100.01 to $1000 is 5%
$1000.01 up is 7%If you make $1001.00 you pay:
100*.02 on the first 100
900*.05 on the next 900
1*.07 on that last dollar$47.07 total.
You only pay the highest rate on the money you make beyond 1000. It only applies to the last dollar.
@futurebird @ligasser @mattdm @unchartedworlds
This is a good example for Calculus courses. The tax brackets define the marginal tax rate, which is a step function (as a function of income). The tax you pay is the integral of this function, which is a continuous piecewise-linear function. Subtract the tax function from the identity function to get your net after-tax income function. Theorem: this is an increasing function if and only if the marginal tax rate is always less than 100%.
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@futurebird @ligasser @mattdm @unchartedworlds
This is a good example for Calculus courses. The tax brackets define the marginal tax rate, which is a step function (as a function of income). The tax you pay is the integral of this function, which is a continuous piecewise-linear function. Subtract the tax function from the identity function to get your net after-tax income function. Theorem: this is an increasing function if and only if the marginal tax rate is always less than 100%.
@TobyBartels @futurebird @ligasser @unchartedworlds
But _not_ a great way to explain it outside of calculus courses. If you tell the average person "this is just simple calculus problem", they will assume that it is incomprehensible.
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@TobyBartels @futurebird @ligasser @unchartedworlds
But _not_ a great way to explain it outside of calculus courses. If you tell the average person "this is just simple calculus problem", they will assume that it is incomprehensible.
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