If you made more than $75,000 last year, what percentage of that income was lost

  1. flacoinohio profile image82
    flacoinohioposted 5 years ago

    If you made more than $75,000 last year, what percentage of that income was lost to taxes?

    We made $159,457 last year, we paid $ 48.3% of our earnings to City, State, and Federal taxes and on top of that we owed an additional $3688 to State and City taxes.  We are paying taxes for two homes, and paying over $427K in student loans.  We are trying to understand why we have to work so hard to make what we earn when we only get to keep half of it.  There are people out there who make way more money than we do that pay far less in taxes.  President Obama paid 20.8% of his total income to taxes, an amount far less than our tax percentage.

  2. kksonakiya profile image76
    kksonakiyaposted 5 years ago

    Hi there flacoinohio. In India we pay approximately 30% of our income for taxes that goes to Education Cess, Higher Education and Higher Secondary Education.
    It depends on how much you earn and Income Tax department has a nice calculator to calculate the exact tax on your income making filling it a lot easier.
    You should also look for rebates and all that would tell you why some people with different jobs pay different tax amount.

  3. LandmarkWealth profile image80
    LandmarkWealthposted 5 years ago

    Thats a good question.  For those that are self employed it is usually much less beacuse of vaious business deductions.  If your combined marginal rate was 48.3% I can believe that.  However your effective rate should likely be much lower. If it isn't, I would suggest getting a second opinion from another CPA.  That being said, I find the effective rate that most people pay to still be misleading.  For example property taxes paid are reported as a deduction but not as a witholding for marginal purposes. They bring down your effective rate against earned income, but you still had to pay the tax. 

    Many items don't appear on the 1040.  Such as Sales tax on all the various things you buy over the year, Gasoline tax (both federal & state), excise taxes on phone usage and various other items. These are just a few.   If you were to add up all the ancillary taxes you pay that don't end up on the 1040 you're probably back up to nearly half of your income.  This is expressly why I am a believer in the flat tax as a SOLE form of revenue for the Gov't.  The gov't has so many ways to backdoor you with taxes that you can't avoid it.  While very wealthy individuals can often control when they realize income and defer until rates are more favorable.  While middle to upper middle income earners depend on the monthly cash flow to live and must declare their income to survive. 

    Under the flat tax with no deductions we could all pay for example 15-20%.  The largest protion of revenue collected would still be disproportionately paid by the highest earners.  However, even if this were to happen the gov't will never get rid of all these other ancillary taxes outside of income tax.  That would require an enormous amount of waste and fraud to be cut from the Federal/State/Local budgets.  Don't hold your breath.