How I Learned to Stop Worrying and Love the US Government Personal Income Tax: How I Learned to Stop Worrying and Love the US Government

Pete Shaheen circa 1985

His first year at Seaholm Mr. Shaheen made $37,500 Gross Income

Marginal tax rate of 10% Did Mr. Shaheen make at least $9,075? Yes! So we figure out 10% of the big number: $9,075 – 0 = $9,075 $9,075 * .1 (10%) = $907.5 Put this is the box for taxed amount at 10% Marginal tax rate of 10%

Marginal tax rate of 15% Did Mr. Shaheen make at least $36,900? Yes! So we figure out 15% of the big number: $36,900 – 9075 = $27,825 $27,825 * .15 (15%) = $4,173.75 Put this is the box for taxed amount at 15% Marginal tax rate of 15%

Marginal tax rate of 25% Did Mr. Shaheen make at least $89,350? No! So we figure out the difference of the last amount we paid in tax ($36,900) and the his pay ($37,500) $37,500 – $36,900 = $600 $600* .25 (25%) = $150 Put this in the box for taxed amount at 25% Marginal tax rate of 25%

Total Federal Tax Add the three numbers together: $907.5 $4,173.75 +$150 $5,231.25 Put this into total tax Total Federal Tax

SS and Medicare SS is 6.2% of your total income up to $117,000. If you make more than 117,000 you pay 6.2% of 117,000. If you make less you pay 6.2% of your income. Medicare is 1.45% of your total income no matter what you make SS and Medicare

SS and Medicare SS Medicare Add these up for your total burden 37,500 * .062 = $2,325.00 Medicare $37,500 * .0145 = $543.75 Add these up for your total burden SS and Medicare

Much like Medicare, this is a simple tax of 4 Much like Medicare, this is a simple tax of 4.35% of your total income: $37,500 * .0435 = $1631.25 State Income Tax

You spend about 30% of your income on things that have sales tax, which is 6%: $37,500 * .3 = $11,250 $11,250 * .06 = $675 Sales Tax

Total Tax Burden Add all these numbers together! $5,231.25 $2,868.75 $1,631.25 +$675.00 $10,406.1 What percent is that, of his total income? Total Tax Burden