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OK..so the hubby is making a salary that puts him at the threshold of 33% tax bracket....plus 10% state tax. That's 43% taxNow his wife is going to have to pay SS and FICA....out of her salary.....so more than HALF her salary now disappears....And, if you start to lose your deductions, that's essentially meaning you, as a couple, now pay more tax......and if we attribute that additional tax owed solely to your wife's salary. Haven't figured out how fast the deductions disappear...then we get hit with the Obamakare 3.8% tax, right? And if you are successful, maybe you hit the 38% tax bracket.....So...between fed and state taxes, the ObamaKare 3.8% tax, FICA and SS, loss of deductions.....who knows, they could be taking over 60% of your paycheck.....not 100%, but that's gotta hurt. Jesus tele. There is so much wrong there is it hard to know where to even start. First of all, it has been pointed out to you literally dozens of times that marginal rate only affects income above that margin. Your marginal rate isn't your total tax rate. I don't know why that concept is so hard. Next, state income tax is deductible on the federal, so you can't just add the two together to come up with your tax rate. Next, the 33% tax bracket begins at $212,500 but SS taxes are capped at $117K. So no, in your example you someone in the 33% tax bracket doesn't get to add in both SS and Medicare taxes. Medicare yes, SS no. The 3.8% Net Investment Income Tax is on capital gains, which are taxed at different rates than ordinary income. So no, you don't get to add that to your top marginal rate either which applies only to ordinary income and not capital gains. Let's just do a quick and dirty example. A married couple filing jointly, making $400,000/year, which means they have the top marginal rate of 33% that you use in your example. After the standard deduction, and no other deductions, and including FICA up to the cap, the effective tax rate turns out to be about 31%. Check my math please, but that's pretty close. And that's with no deductions except the standard deduction. 31% is a lot, but it isn't 100% or even 60%. For incomes way above the top marginal rate the calculation becomes trivial, because the more income increases, the closer the effective rate gets to the top marginal rate. So for an income of say, $10 million, the effective tax rate is right around 40%. You claim of 60% is just nuts. It is mathematically impossible.
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