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Thread: Do We Have An Accountant In The House?

  1. #1

    Default Do We Have An Accountant In The House?

    Based on the tax rates, it shows that individuals who earn $0-$8,700 are taxed at a rate of 10%. I KNOW that I am misinterpreting that, but based on how I read that, doesn't that show that the bottom 48% who pay no income taxes actually do pay income taxes at a 10% rate?

    Again, I KNOW this isn't the case, but I can't figure this out.
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    World Champ ODH's Avatar
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    Default Re: Do We Have An Accountant In The House?

    Quote Originally Posted by ban basketball View Post
    Based on the tax rates, it shows that individuals who earn $0-$8,700 are taxed at a rate of 10%. I KNOW that I am misinterpreting that, but based on how I read that, doesn't that show that the bottom 48% who pay no income taxes actually do pay income taxes at a 10% rate?

    Again, I KNOW this isn't the case, but I can't figure this out.
    I am not an accountant, but I know that is income after deductions, so the standard deduction for a single is $5,950, so his 10% rate only starts at dollar 5,951. I don't know that much about other decuction and adjustments availabe to the poor
    What percentage o fthe 48% earns no income? They are obviously paying no taxes.

    And I will scold you for repeating the line that those people pay no income tax. Most people with an income are paying state income tax and I believe all have to pay Social Security and Medicare tax.

  3. #3

    Default Re: Do We Have An Accountant In The House?

    Quote Originally Posted by ODH View Post
    I am not an accountant, but I know that is income after deductions, so the standard deduction for a single is $5,950, so his 10% rate only starts at dollar 5,951. I don't know that much about other decuction and adjustments availabe to the poor
    What percentage o fthe 48% earns no income? They are obviously paying no taxes.

    And I will scold you for repeating the line that those people pay no income tax. Most people with an income are paying state income tax and I believe all have to pay Social Security and Medicare tax.
    Thanks.

    No need to have to scold me: I've been saying the exact same thing that you said about them paying other taxes for over 20 years now. In fact, I would also add in other taxes that they pay that you didn't mention. I simply just didn't understand how the numbers were presented to me in the tax table.
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  4. #4

    Default Re: Do We Have An Accountant In The House?

    Quote Originally Posted by ODH View Post
    I am not an accountant, but I know that is income after deductions, so the standard deduction for a single is $5,950, so his 10% rate only starts at dollar 5,951. I don't know that much about other decuction and adjustments availabe to the poor
    What percentage o fthe 48% earns no income? They are obviously paying no taxes.

    And I will scold you for repeating the line that those people pay no income tax. Most people with an income are paying state income tax and I believe all have to pay Social Security and Medicare tax.
    Upon second thought, this doesn't make sense to me either. I would be HIGHLY doubtful that 48% of working Americans are earning less than $5,951/year, and therefore, not paying federal taxes.

    Stated another way, almost half of us who work make less than $6,000/year?! Homey thinks something's amiss here.
    UNI Panthers...Because it's just right.

  5. #5

    Default Re: Do We Have An Accountant In The House?

    Got my answer from a colleague of mine, who is an accountant. Now THIS makes more sense to me.


    For a single filer,they have a standard (guaranteed deduction) of
    about $5,950 and a personal exemption of $3,800. Put together, that's $9,750.
    A person who makes less than that, pays no income tax. I can give you some
    other circumstances that present some interesting points.
    UNI Panthers...Because it's just right.

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    World Champ ODH's Avatar
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    Default Re: Do We Have An Accountant In The House?

    From: Romney Is Half Right About People Who Don't Pay Taxes - Rick Newman (usnews.com)

    most are generally playing by the rules and claiming tax breaks that Congress has been layering onto the tax code for years—mostly back when the government had much healthier finances and could afford to be so generous. Nor are most of those people employing high-priced tax strategists (ahem) to skirt their responsibilities. The Tax Policy Center found that most of those 47 percent are senior citizens living on fixed incomes or low-income families with kids. A combination of low incomes and various tax credits simply cuts their taxable income to a threshold at which they don't have to pay.

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