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Author: mlk58 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121256  
Subject: Tax rates: is it worth it to work? Date: 3/24/2001 1:06 PM
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I have heard people say it's not worth it for the wife to go to work, because "it will just raise our tax bracket." The implication is that having extra income coming in could actually cost the family money overall because of higher taxes.

This seems wrong to me. Isn't it the case that higher tax rates only apply to marginal income? So if husband makes $50,000 and is taxed at, say 33%, and wife makes $25,000 and raises the couple's marginal tax rate to 38% or whatever, the first $50,000 will continue to be taxed at 33% and only the additional income will be taxed at the higher rate. So the extra income will definitely benefit the family. But I have heard lots of people say that the extra income will cause ALL the income to be taxed at a higher rate.

Am I right?

Can you even understand my question?

Thanks for any light you can shed on this.

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