We took a huge hit in our coat of living when we fell off the benefit cliff. I know it’s lost credits rather than more taxes but it doesn’t really matter when you make more and struggle at least as much as before.
Comment on Is 33 cents a small amount of money?
jj4211@lemmy.world 15 hours agoThis all boils down to a common misconception about ‘tax brackets’.
To simplify, pretend there’s a 28% tax bracket up to 100,000 dollars, and a 33% tax bracket when you hit 100k. The first 100k is always taxed at 28%, no matter what you make, and it’s only the incremental amount that gets taxed heavier. So here in this example, that would mean tax burden would be 28,000.33 instead of 28,000.28. These are not the exact brackets or percentages, but it’s at least showing the right magnitude of increase versus total amount.
However, many people are “afraid” of bumping a higher tax bracket. They think the tax bill would go from 28,000.28 to 33,000.33. That the tax bracket bumps up all your liability. I remember growing up people saying “I have to watch out and not hit the bigger tax bracket, if I’m close then I need a big raise to make it worth it, or else the raise is going to cost me more than it would make me”. This a big driver of antipathy toward democrat tax policies, a belief that mild success will punish them, despite it only increasing on the incremental amount.
doingthestuff@lemy.lol 5 hours ago
sockenklaus@sh.itjust.works 5 hours ago
German income tax works the same and most Germans get it wrong too. It’s really infuriating.
LifeInMultipleChoice@lemmy.world 14 hours ago
To be more specific the first 100,000 isn’t taxed at 28%. The 44 to 100k range would be, but below that will be taxed at lower percentages. The first ~10k you make is taxed at 10%, and then it increases throughout.
jj4211@lemmy.world 14 hours ago
If getting specific, there’s no 28 percent or 33 percent bracket, so these are all examples rather than real figures. I did make a comment using real numbers, same general magnitude but just more specific about the brackets.
dan@upvote.au 10 hours ago
The first ~10k you make is taxed at 10%
In the USA, technically the first $15,000 (if single) or $30,000 (if married and filing jointly) is taxed at 0% due to the standard deduction. If you earn less than that, you can tell your employer that you don’t want any tax to be withheld.
Treczoks@lemmy.world 11 hours ago
OK, so it is similar to our system. And would probably in the range of cents or a few dollars then.
Lyrl@lemm.ee 10 hours ago
A lot of US benefits have “benefit cliffs” where making $1 more substantial reduces or even completely disqualifies a person from SNAP (food stamps) or childcare subsidies or Medicaid. ncsl.org/…/introduction-to-benefits-cliffs-and-pu…
It’s not surprising people whose families are directly affected by, or who know people affected by, benefit cliffs think the lawmakers set up taxes the same way.
jj4211@lemmy.world 10 hours ago
True, though if we are talking about tax bracket going over 30 percent, that would be at nearly 200k, so well above those thresholds too. Of course the numbers aren’t 28 and 33, but that is the closest threshold to the example.