Ajones1021's Blog

FeaturedImageAs confusion over tax rates and the fiscal cliff dominates the conversation in Washington, it is becoming apparent people do not understand how a progressive tax code works. . A progressive tax code increases a person’s tax rate as their income increases unlike more regressive taxes, which set a uniform rate regardless of income. The federal income tax, being the most progressive tax, has 5 different brackets or tiers. As an individual earns more, that income is taxed at a higher rate with rates set at 10%, 25%, 28%, 33%, 35%. The top rate of 35%, which gets all the attention, is only paid on income over $200,000 for an individual or over $250,000 for a couple.

Now, if a person makes $251,000 a year, all that income is not then taxed at 35%. Only $1,000 (the amount over $250,000) is taxed at 35%. Everybody, from business owners to the working…

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About Dean Garrison

Dean Garrison is a husband and father of six, who faithfully pursues the American Dream. He has been MOSTLY self-employed for the last 20+ years and has been a top earner, executive and leader for several direct sales companies.
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  1. I reblogged this to D.C. Clothesline, not because I agree with a tax increase on the top 2% because I do not. But I do believe that the author is correct in the assumption that most people do not understand how a progressive tax system works. I have heard, on more than on occasion, something to the tune of, “I can’t work overtime because if I do my paycheck is less than if I work 40 hours.” A progressive system doesn’t work that way. I am not saying that it’s impossible for your employer to screw up payroll, and that this can’t happen…but ultimately at the end of the year you will be taxed progressively. A 35% or 25% tax bracket doesn’t mean that those percentages apply to every single dollar you make. I think this is a common misconception. It is probably no secret that I lean slightly toward the right, but that doesn’t mean that we should not read and understand both sides of every issue. I am against raising taxes on the wealthy simply because it has never proven to work. The bill always ends up with the lower and middle class. Look at what is already happening with Obamacare. Companies are cutting hours to skirt the requirement of paying for insurance for certain employees, or simply just cutting their workforce. Who did the bill end up with in those two cases? It has never worked and probably never will.

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