1. 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

2. Pete Shaheen circa 1985

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

4. 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%

5. 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%

6. 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%

7. 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

8. 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

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

10. 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 * = $
State Income Tax

11. 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

12. 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