I teach school for 40 grand a year before taxes.

[arely staircase]

Last edited Tue Jan 24, 2012, 08:56 PM - Edit history (1)

I have a 2000 dollar deductible on my health insurance- better plans are available but I can't afford them.

My tax rate is about twice Mitt Romney's before deductions and still more than he pays afterwards. I won't argue here the worth of what I do for a living against the importance of his profession - shuffling money around and laying people off. But the fact that I am hit with twice the taxes he is, relative to income, is absolutely disgusting.

[niyad]

1. but, according to scott brown, you make over 100k per year

[arely staircase]

5. Don't I wish. nt

[ejpoeta]

2. don't you feel like you are living in the lap of luxury?

that is SO MUCH money!!

[demtenjeep]

3. yup

I have been teaching a bit longer, I teach for 55 grand and while healthcare is offered in my contract, I opt to take my husband's policy because it is quite a bit better in coverage and lower out of pocket expenses. In return, I get an extra 100 bucks a month on my check BUT it is taxed at @ 30%


something is wrong with the system and Newt/Romney is NOT going to fix it

[SickOfTheOnePct]

35. I'm just trying to figure something out

At $55K, how is the additional $100 being taxed at 30%? I didn't even know there was a 30% marginal rate.

Not suggesting you don't pay enough or that Romney pays too much, just trying to see where the numbers come from.

[FogerRox]

74. Top income rate is 35%

[SickOfTheOnePct]

80. Not on $55,000 n/t

[greenman3610]

77. Problem with Health insurance? simple. just fire your health insurer.

that's what Mitt would do! get with the program.

[progressoid]

4. And don't forget all the perks you get

like...um...

[arely staircase]

6. Like that 2000 dollar deductible. nt

[progressoid]

12. Yep.

We have a 2800.00 deductible. (we're not teachers but have the same problems).

[bluerum]

7. Agreed.

But there are those here who feel the "risk of investment" justifies a 15% tax rate. I don't. I feel that having the opportunity to invest on such a massive scale requires a tax rate of 50%.

[bigbrother05]

10. Might buy into that if they can't write off losses

If you reward their risk, doesn't it make sense to limit their deductions. How about they can't claim a loss greater than the tax liability of their profits. If 15% on the profits, you only get to deduct 15% of the loss.

[arely staircase]

17. My rate is thirty percent. Romney's is less than fourteen.

Add to that the fact I live in Texas which gets it's money from me in the form of a regressive sales tax and the 2500 bucks in property taxes I pay on my home. Granted I can deduct the property taxes from my income but not the slew taxes. I have to pinch every penny. No 10 thousand dollar bets for me.

[Snake Alchemist]

72. I have a hard time believing this unless it's a joint return

Please see page 14.

http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

[arely staircase]

18. So do gamblers in Vegas get that rate? nt

[demtenjeep]

8. at the end of the day, I know I have made a very positive impact. Here is a post I received from a

former student:


Truth is you were seriously one of the best teachers I've ever had, you made things fun and always helped us try to learn & understand better. Truth is you were more then just a teacher, you cared for us and were concerned. You always gave your advice & tried to help. Truth is I miss you. Truth is you're the only teacher that I have ever had that I still go to for advice and to talk to.

[renate]

62. that is wonderful

Congratulations! That must mean a lot to you. I think many teachers genuinely care for their students both as learners and as human beings, but not all of them make it so clear to their students that the kids realize it at the time. Usually the appreciation comes later. It must make you feel so good to have heard that from a student who is still young enough to use that "truth is" format.

[arely staircase]

81. that is awesome

and the reason we do the work we do. it certainly isn't for the money and it certainly isn't to make our kids the best little standardized test takers in the world.

[Enrique]

9. it takes Mitt about 15 hours to make your annual salary

have a nice day.

[arely staircase]

14. Grrrrrrrrr! nt

[hfojvt]

11. by my figures a single person would pay $4,183

which is only a 10.46% tax rate. Your tax rate is only twice as high if you include FICA taxes at 15.3%. But unlike income taxes, you should get FICA taxes back in social security benefits, at least you will get some of them back.

[Ms. Toad]

19. I suspect the OP was talking about the marginal tax rate

(The tax paid on the last dollar earned.)

Some income is not taxed at all (standard or itemized deduction, and exemptions), and some is taxed at a much lower rate.

It doesn't excuse Romney's pitiful tax rate, but for an apples to apples comparison the OP needs to look at the dollar amount last year's taxes owed and divide it by the dollar amount of last year's income. As you discovered, that will be a much lower rate.

I doubt Romney's figures included FICA (or state or city taxes), since I think what was released was his federal tax returns.

[hfojvt]

38. the marginal rate at $40,000 is only 15%

and there are not FICA taxes on capital gains. I think the House version of HCR called for medicare taxes on all types of income, but I don't think it was in the final bill.

At income of $43,300 the marginal rate jumps up to 25% but a person can reduce that by making IRA contributions, and that's only true of single people. Married couples or those with children would be paying a lot less until the incomes get higher.

[spooky3]

40. he/she could be married to another earner and file jointly

If the other earner makes a lot, their marginal rate may be much higher.

[hfojvt]

43. for a couple, the 25% rate starts at $82,400

but a kid would also reduce taxes by $1,000 as well as providing another $3,650 exemption.

However, $80,000 a year happens to be more than 75% of American households make (although my brother is in that bracket and claims he is not making it, but you can do that at any income if you buy too expensive of a house).

[Ms. Toad]

41. Aside from self employment -

FICA and Medicare don't show up on the federal taxes.

Maybe the OP was including state taxes (which Romney was also probably not including).

[arely staircase]

33. It is fixed. The point remains. nt

[Starry Messenger]

13. And yet they won't be happy until they bust our unions and take even more.

The Heritage Foundation thinks that the US estimation of poverty at around $28 grand is way too high, so I guess by that logic our $40 grand makes us practically jet-setters. If they can destroy the unions, they can get us on an hourly wage and skim off the rest that we're just blowing on food.

[arely staircase]

21. I'm our campus' AFT building rep.

But here in the right-to-workers' paradise of Texas we come pre-busted.

[Gus2525]

15. I am in my 39th year of teaching. I now make $ 50,000... finally.

I resent having to pay a higher rate than the 1%. Thanks to Occupy for making this now part of the national discussion. The rethugs are full of it when they cry class warfare. How about renewing the discussion about oil subsidies if we're talking about fairness. Corporate welfare is ok I guess. Anyone notice last night that all references to the financial collapse was the fault of Fannie and Freddie? No mention of responsibility of Wall St. Man, those rethugs got them some serious amnesia.

[former9thward]

16. I would go to another tax accountant.

Or if you prepare your own taxes you should go to a professional. If your tax rate was twice Romney's you would be making 200K a year. No one making 40k a year pays 30%.

[Ruby the Liberal]

20. Thats Federal

Keep in mind that OP is also paying into SS and Medicare, where the Capital Gains people are not.

[former9thward]

25. No the math does not add up.

Romney made money off of speaking fees and he would pay SS and Medicare on those. Also he would pay the employer's share of the SS on those fees. As far as the OP goes even when you add SS and Medicare it could not add up to 25%.

[Ruby the Liberal]

28. I didn't offer any math for analysis

I noted the additional taxes levied on ordinary income that cap gains don't pay.

How many states only levy taxes on earned income?

[former9thward]

31. The OP's math does not add up.

[arely staircase]

32. I have fixed it. My bracket is 25 percent

After my deduction and when you ad SS etc. I still pay a higher percentage than him.

[sinkingfeeling]

51. Not if he's put himself in a 'S' corporation. They're exempt from the 2.9% Medicare

rate. And Mitt would only have paid SS taxes up to the cap or on about 1/5 of the money he earned for speaking fees.

[former9thward]

55. Yes, without having the exact return in front of us it is hard to know the exact figure.

But it is without question the OP is not paying 25%, either marginally or effectively, on 40k. It is mathematically impossible.

[bornskeptic]

59. He'd only pay SS on the first $106,000. The speaking fees were a small fraction of his income,

so the FICA taxes wouldn't affect the percentage much.

[lacrew]

27. Starting in 2013, high income households will pay 3.8% to medicare, on investment income

[arely staircase]

22. Sorry my rate is twenty-five percent - still almost twice that of Mittens nt

[former9thward]

26. You are not paying 25% on 40k.

The 25% rate comes in at 34,000 which is the income after you have taken a standard deduction and personal exemption. The standard deduction and personal exemption would push you below 34K to the 15% at the most.

[arely staircase]

34. My bracket is Twenty five and I still pay more

than mittens relative to income. Edited to say - even after deductions when you throw in SS and medicare

[oldhippie]

36. You seem to keep speaking of marginal rate, while this whole discussion is about effective rate ...

Do you understand the difference?

[arely staircase]

39. yes i do and i thought i cleared that up

in the 25 percent bracket with standard deductions plus social security and medicare I end up paying around 16 percent - this is still higher than romney. i've already expalined it upthread.

[Ms. Toad]

47. Romney's number does not include SS or medicare. n/t

Last edited Wed Jan 25, 2012, 09:38 AM - Edit history (1)

[arely staircase]

49. does one pay ss and medicare on capital gains?

[Ms. Toad]

50. Nope.

Only on earned income. (For 2011 he had no earned income. I didn't find anyone specifically commenting on his 2010 taxes - but I found one that implied no earned income for either year).

But that is a separate question from the return he made public (and there are several other taxes which are also separate and not disclosed - state, city, property, sales).

If you're pulling different taxes into the mix, because he doesn't pay SS or Medicare taxes, as a Massachusetts resident his capital gains may work against him - in the ballpark of the FICA and Medicare taxes he doesn't pay at the federal level. The state tax income tax rate is 5.3%, but some capital gains are taxed at 12% (I couldn't quickly find the details - but one general description sounded like it was most capital gains). So what he saves in FICA/Medicare at the federal level appears to be offset by the surcharge for unearned income at the state level.

It would be interesting to know his total tax v. income, but as far as I know he only released his federal taxes.

[oldhippie]

54. Wouldn't his speaker fees be earned income?

He earned his "not much" speaker's fees of a couple hundred $K. Wouldn't he have had to pay the max SS tax on that self-employment income? And that doesn't seem to be included in his income tax paid.

[Ms. Toad]

58. I was quite surprised

that the people reviewing his returns indicated that he had no earned income in 2011. The statements haven't been as clear about 2010 - but they seem to indicate the same thing.

There are a couple of possibilities : He has Schedule C income (which would be subject to SS taxes - and the income shows up about halfway down the form, rather than on the top line which is what one reviewer said was blank); he has set up a corporation to handle his speaking engagements and earns dividends as a corporate shareholder - rather than a salary (it has been a long time since I looked at taxation of the various corporate entities, but I believe he could set it up so that money from speaking becomes something other than earned income).

But as far as the tax reported - line 55 (the income tax line) does not include FICA self employment taxes. That contributes to line 61, which includes a bunch of other taxes - including the employer's share of FICA taxes on household help, for example. I'm pretty sure it is line 55 which is being reported for Romney - but, again, all I'm finding is the analysis not the actual return - so no way to be absolutely sure.

[former9thward]

37. You simply are defing IRS tax tables. But keep paying that 25% if you wish.

It is completely voluntary if you do.

[BadgerKid]

23. Sounds like you're overpaying twice as much as you should be, or

there's more to the story that you haven't disclosed (not that you should). No offense intended.

the figure you gave is roughly my 2011 AGI , giving me an effective federal tax rate around 11-12% (no itemizing).

[lacrew]

24. This dog realy doesn't hunt

You can go to H&R Block and do a quick tax calculator.

Single and make $40k, you owe 10.4% in taxes...and you can add 4% for SS and 1.5% medicaid...15.9%.

Got a kid, and make that much? 12%

I've literally filled out hundreds of returns (for free, it turns out). Most people only have a partial knowledge of the code. For instance, a single person making $40k is in the 25% bracket...not 'more than twice Romney's'. A married couple making that much would be in the 15% bracket.

But beyond that, a 25% bracket does not usually mean you pay 25%.

I firmly believe that a tax class should be a requirement for high school graduation.

Advantages:

1. Young people won't get ripped off for doing ten minutes paperwork, and paying for a refund anticipation loan.

2. People will have a fuller knowledge of what they actually pay...not what Warren Buffet says they pay

[arely staircase]

29. Fixed nt

[former9thward]

30. +1

[Honeycombe8]

44. +1 nt

[Ms. Toad]

46. Romney's number does not include SS or medicare.

just federal income taxes. Income taxes paid/AGI. That's the 10.4% number.

[karynnj]

52. Actually it DOES include all the SS and Medicare that Romney pays

The reason is that he pays ZERO. There are no payroll taxes on the type of non wage income he earned.

[Ms. Toad]

53. Yes - but to compare apples to apples

you need to use the same measure - what is on the federal tax return, which does not include FICA/Medicare for the OP either.

I think it would be very enlightening to see not only federal, but state, city, property, FICA, Medicare, and so on - so we do get the total tax picture.

As I indicated, different income plays out differently.

In Romney's case, he benefits in the FICA/Medicare realm from his income being unearned. That benefit appears to be more than offset by the additional taxes he will have to pay at the state level - FICA stops being collected at a little over $100,000; the ~6.5% add on to state taxes for unearned income does not appear to be capped. (I have not spent a great deal of time looking at Mass. taxes - this is based on the state website which says that some capital gains are taxed at 12%, as opposed to the ~5.4% tax rate for earned income, and a "should you take a job in Mass?" fact sheet which suggested that it is most capital gains that are taxed at 12%.)

So - it is not really fair to include the implications of unearned income on FICA/Medicare for purposes of thinking about taxes, if you don't also include the rest of the implications of unearned income (i.e. at the state or local level).

[Ms. Toad]

60. But what was released was the federal tax return -

not all taxes he paid.

So the comparison needs to be between what is on the OPs equivalent document (i.e. federal return to federal return). The OP also had no SS and Medicare on the federal return.

Romney's effective tax rate still stinks - but we lose the argument when we start pulling in extraneous things that are too our advantage because Romney's money is unearned (SS and Medicare) and omit things that are not (the bump up in the state tax rate)

[karynnj]

67. Either comparison is valid - and as the SS and Medicare are paid in one case and not the other,

there is some reason to say the comparison of total federals taxes is at least as valid - as long as it is explained. I don't think the fact that his state rate is higher changes the point that his federal taxes are a lower percent.

[Ms. Toad]

70. Federal income tax is a bit artificial

since it is only a portion of the taxes anyone pays, but that is what people seem to be looking for.

I would prefer to see overall income taxes paid, at all levels. (It isn't clear to me whether SS and Medicare should be included, since those are - essentially - mandatory contributions to retirement and medical insurance: Federal Insurance Contributions Act contributions, rather than taxes. Unlike other taxes, those come back to the taxpayer fairly directly.)

But - you are right that whatever comparison is made, a clear statement of what it is that is being compared is needed.

[ErikJ]

61. Self-employed: pay 15% SS-NO deductions

So at $40,000 a year : 10% income tax total + 15% Payroll SS tax = 25% ALONE

--not counting all the STATE and LOCAL taxes boosting it up to probably 35%

Romney pays ZERO payroll taxes and his state and local taxes are probably negligible as well as he spends only small percent of his income.
His total tax (13%) is more like 1/3rd of the ave American self-employed.

[former9thward]

63. Romney would pay payroll taxes on his speaking fees.

Those were several hundred thousand dollars. I don't know why you would think the state taxes would be negligible. They have nothing to do with spending.

[ErikJ]

64. State sales tax and property tax?

Yes those are HIGHLY dependent on spending. His property tax is probably pretty high but compared to his income is probably negligible.

[former9thward]

66. I'm sure you are right.

Of course that applies to anyone who is wealthy.

[lacrew]

65. The OP Did not say anything about being self employed.

But as I said before, it is important to actually know about the tax code.

If you make $40k and file an SE form, you will initially take your $40k and multiply by 92.35%....$36,940.

Then you will multiply by 13.3%...$4,913.

Then you will take a deduction for the employer equivalent of SE tax of 57.51%...to be put into the 1040 form, as a reduction of AGI.

Ok, so far the actual SS tax would be $4,914, or 12.3%.

And, in the 25% bracket, the OP's income tax would be reduced by $706. Since we are confusing apples and bananas, just credit that the the SS tax...for an effective SS tax of 10.5%.

Not 15%....please know about taxes before running off with slogans about it.

[ErikJ]

68. Effective TOTAL taxes, apples to apples.

David Cay Johnston gave the figures about total overall tax burden and the average working American does pay a much higher percent than the top 1% and even much more than the top .1%.

The Federal hidden fees and taxes PLUS all the state and local taxes into account.

I suggest you read his famous article: "9 Things the Rich dont Want you to know about taxes"

http://wweek.com/portland/article-17350-9_things_the_rich_dont_want_you_to_know_about_taxes.html

[lacrew]

71. I take it you didn't read my post

...or do we agree that it is a false statement to say that a SE person making $40k pays 15% SS tax?

Or do you dispute my calculation?

I am going to repeat a statement I made earlier:

"Please know about taxes before running off with slogans about it."

Your 15% assertion was quite specific, and easily proved to be false...which makes for a very bad rallying cry.

If you want to change the subject to hidden taxes, I do not like federal excise taxes to use the phone, fly an airplane, etc. etc....because it is regressive. I do not like franchise fees which are a backdoor tax to utility users. I do not like PILOT payments from municipal functions back to the general fund. All of these are hidden, and regressive. But that does not excuse the OP from making the original error of declaring to have a rate 2.5 times that of Romney's, or yours of claiming the OP would pay 15% SS tax. These are fundamentally incorrect statements...and you can't win an argument spouting off numbers somebody's cousin posted on their Facebook page....you have to have genuine numbers.

Now, if you want to bring in state taxes, the Massachussetts system looks to have had alot of recent changes...but has landed on 5.3% for cap gains, interest and dividends (used to be over 12% and may actually be that rate for some of Romney's longer held holdings).

And, most income is taxed at a flat rate of 5.3%. Ergo, bring state taxes into the discussion does not add or take away from the argument.

Please everybody, KNOW about taxes, before making claims which will easily be debunked.

[ErikJ]

73. I was adding the part about Self employed not applying it to OP

SEmployed SS tax rate is roughly 15%. Employees pay half that.

Here's from Johnston's tax article I referred to.:

"When it comes to state and local taxes, the poor bear a heavier burden than the rich in every state except Vermont, the Institute on Taxation and Economic Policy calculated from official data. In Alabama, for example, the burden on the poor is more than twice that of the top 1 percent. The one-fifth of Alabama families making less than $13,000 pay almost 11 percent of their income in state and local taxes, compared with less than 4 percent for those who make $229,000 or more."

(And for those in Romney's bracket I would say the difference is much more than that)

3. In fact, the wealthy are paying less taxes.

The Internal Revenue Service issues an annual report on the 400 highest income-tax payers. In 1961, there were 398 taxpayers who made $1 million or more, so I compared their income tax burdens from that year to 2007.

Despite skyrocketing incomes, the federal tax burden on the richest 400 has been slashed, thanks to a variety of loopholes, allowable deductions and other tools. The actual share of their income paid in taxes, according to the IRS, is 16.6 percent. Adding payroll taxes barely nudges that number.

Compare that to the vast majority of Americans, whose share of their income going to federal taxes increased from 13.1 percent in 1961 to 22.5 percent in 2007.

(By the way, during seven of the eight George W. Bush years, the IRS report on the top 400 taxpayers was labeled a state secret, a policy that the Obama administration overturned almost instantly after his inauguration.)

http://wweek.com/portland/article-17350-9_things_the_rich_dont_want_you_to_know_about_taxes.html

[lacrew]

76. These two statements do not agree with each other

"Self-employed: pay 15% SS-NO deductions So at $40,000 a year : 10% income tax total + 15% Payroll SS tax = 25% ALONE"

and

"I was adding the part about Self employed not applying it to OP"

Unless we are conincidentally talking about another imaginary person who happens to make the same amount as the OP...and we are discussing it on the OP's thread....which I suppose is possible.

But its this statement which still convinces me that you did not read my post at all:

"SEmployed SS tax rate is roughly 15%. Employees pay half that."

You will find in my post that this is just plain incorrect. There is no nuance to this...just the mechanics of the SE form. Plain. And. Simple.

It does no good to repeat incorrect information....in fact, it reduces the credibility of the argument.

[Puzzledtraveller]

75. but Warren Buffet is one of us!!

[Honeycombe8]

42. The federal tax rate on $40K is not 30%. Mine is less than that and I make more than you do.

And that's before deductions.

Mitt paid 13.9%, I think, after deductions? I paid considerably less than 28% after deductions, but still considerably more than Mitt.

I have no doubt your taxes after deductions are more than Mitt's, but I also know they're less than mine.

I thought teachers got free health ins. What state do you teach in that doesn't provide health ins.? Do you get a retirement package? Does your $40K include extra income you get for a second job you do during the 3 mos. you're off in the summer?

[Ms. Toad]

45. Before deductions (at least before what most of us think of as deductions).

Romney's 13.9% and 15.4% rates were calculated by taking the taxes he paid and dividing by his Adjusted Gross Income (the bottom number on the front page of the 1040) - before standard/itemized deductions and exemptions (but after deductions for self-employment taxes and IRA contributions)

2011 - 3.2 M in taxes / 20.9 M AGI = 15.3%

2010 - 3 M in taxes / 21.7 M AGI = 13.8%

(The percentages are off a hair because I just grabbed the rough numbers rather than track down the actual returns)

- no state taxes
- no fica
- no sales taxes

- just pure federal income taxes paid divided by AGI.

[glinda]

48. and the hours are endless because teachers are not paid by the hour usually

[_ed_]

56. Shameful

My tax story always amazes people. My wife and I run a small business out of our house. To make a long and complicated tax law story short, we wind up paying about a 40% actual tax rate for federal taxes, because we have to pay DOUBLE payroll tax. The other option is to hire a payroll company and lose the liquidity of our income, which doesn't work with our business model. Beyond that, we have to provide ourselves with extremely expensive private healthcare insurance (wife has pre-existing condition).

40%. Forty fucking percent. We're quite comfortable, and I actually don't even mind paying 40%. But, when Mitt Romney pays less than 14%....

In what rational world would a husband-and-wife small business being run out of a basement pay a 40% rate and a corporate raider who shuffles paper around for a living pay 13%? Exxon gets a refund, but we pay 40%?

Don't forget: in America, small business is our backbone. That's why we force small businesspersons to pay fucking 40% in taxes and provide themselves with expensive and inadequate healthcare.

[catrose]

78. And just try to get a mortgage!

The banks go all emo about that.

[AnotherMcIntosh]

57. If you look at your Social Security taxes, + compare them to Rmoney's, you'll be even more outraged.

Under Reagan, Social Security taxes went up dramatically and he borrowed heavily from the SS trust fund to finance the ever-expanding military-industrial complex.

Logically, if our politicians are going to finance the military-industrial complex by borrowing from the SS trust fund, why shouldn't all income obtained by members of the super-rich be subject to the Social Security taxes?

[ErikJ]

69. 9 Things The Rich Don't Want You To Know About Taxes

Very interesting article which backs up the OP.

http://wweek.com/portland/article-17350-9_things_the_rich_dont_want_you_to_know_about_taxes.html

[blueamy66]

79. I work in Sales and Mktg. for $42k before taxes

and I pay $250 a month for health insurance with a $500 deductible. God help me if I get seriously ill....