Does everybody know how progressive federal income taxes work? Married couples filing jointly pay 10% on the first $17,000, and then 15% on the next $52,000, then 25% on the next $70,000, etc… Wherever you stop, that’s your “marginal tax rate,” or the tax rate that applies to the next dollar you could make. There’s a pretty easy to read set of tables here. By the way, if you and your spouse make the $69,000 it takes to get into that third bracket (the first $17,000 plus the next $52,000), then you’re doing better than over 2/3rds of the country, according to Wikipedia.
A couple like Amy and I who are in the third bracket, with a marginal tax rate of 25%, are supposed to pay the federal government 10% of the first $17,000 (=$1,700) plus 15% on the next $52,000 (=$7,800) plus 25% on the rest.
However our effective tax rate, which what we actually paid the U.S. government in 2010 divided by our total income, was less than 10%. Less than 10%, my friends, is not being taxed to death. Of course, this doesn’t include state and local and sales taxes.
How did we go from the formula I gave you above, which would have taxed just our first dollars at 10%, and the rest at higher rates? Exemptions, deductions… AKA, loopholes. Mortgage interest and property tax deductions, charitable deductions, student loan interest deductions, etc, etc, etc…
Next time you hear somebody complaining about being taxed at 35%, you should know that they are spinning the data. AKA, lying.