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Taxing the rich - what is the cutoff?

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Old 06-17-2008, 11:53 AM   #121
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Re: Taxing the rich - what is the cutoff?

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Originally Posted by Schneed10 View Post
Major student loans definitely throw a wrench in the works. But few have to rack up the kind of debt that SGG did. Usually, you either get grants or aid, or go to a state school in college to keep the debt lower in undergrad. Law school or med school will undoubtedly be expensive.

As for kids in daycare, I still maintain that there are so few people making $250K who also have 2 or more kids in daycare that it's not even worth discussing. Not too many late 20s/early 30 somethings make that much money, it takes a while to work up to $250K for most folks.
I can't speak for the general population, but in the DC area, with so many attorneys and IT professionals, you would be surprised how many 30 year olds with 2 kids and a household income of around $250k there are. As I mentioned, starting salary for a 25-year old is $160k at the major firms, which is thousands of people in this area.
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Old 06-17-2008, 11:53 AM   #122
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Re: Taxing the rich - what is the cutoff?

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Also how many people making around 250,000 will decide that it does pay to make the 250,000 and instaed make 245,000 and still bring home more money then if they make $250,000. Heres the math. If a person makes 250,000 their additional tax is $7,000 which drops their pay to 243,000 and if they made $245,000 they do not have this additional tax. For people who have their own business they would just change how they pay themself. For the person who said they only work 2 months to pay taxes here is the math. Their tax bracket is around 33% and 33% of 12 months is 3.96 months or around $82,500 if making 250,000. If we jump that an additional 3% now they are working 4.32 months to pay taxes. I just feel thats not fair.
Bad math, but I suspect just about everyone in this thread is making the same mistake.

They would tax an additional 3% only on the amounts beyond $250K.

So if you make exactly $250K, your tax is not affected. If you make $251K, they take 3% of the money BEYOND $250K. So it would be 3% of $1000. Or $30 extra.

That's the biggest reason why those making $250K wouldn't feel it at all. If you make $500K, you're going to feel an appreciable difference in your tax bill, but you make so darn much it wouldn't be a problem.
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Old 06-17-2008, 11:54 AM   #123
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Re: Taxing the rich - what is the cutoff?

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That's the marginal tax rate, not the average tax rate. You pay the percentage on the bracket in which that particular dollar of income falls:
Tax rate - Wikipedia, the free encyclopedia
Here's a better explanation:
Progressive tax - Wikipedia, the free encyclopedia
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Old 06-17-2008, 11:55 AM   #124
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Re: Taxing the rich - what is the cutoff?

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I can't speak for the general population, but in the DC area, with so many attorneys and IT professionals, you would be surprised how many 30 year olds with 2 kids and a household income of around $250k there are. As I mentioned, starting salary for a 25-year old is $160k at the major firms, which is thousands of people in this area.
I should run that lawyer salary by my lawyer friends around here in Philly. They start out at $60K. Must not be "major" firms.
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Old 06-17-2008, 11:57 AM   #125
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Re: Taxing the rich - what is the cutoff?

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Also how many people making around 250,000 will decide that it does pay to make the 250,000 and instaed make 245,000 and still bring home more money then if they make $250,000. Heres the math. If a person makes 250,000 their additional tax is $7,000 which drops their pay to 243,000 and if they made $245,000 they do not have this additional tax. For people who have their own business they would just change how they pay themself. For the person who said they only work 2 months to pay taxes here is the math. Their tax bracket is around 33% and 33% of 12 months is 3.96 months or around $82,500 if making 250,000. If we jump that an additional 3% now they are working 4.32 months to pay taxes. I just feel thats not fair.
You do realize that it's a progressive tax don't you? In 2008 you pay 33% on anything above $164,550 (you pay .33 on 85K not the entire 250K).
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Old 06-17-2008, 11:58 AM   #126
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Re: Taxing the rich - what is the cutoff?

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I should run that lawyer salary by my lawyer friends around here in Philly. They start out at $60K. Must not be "major" firms.
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These numbers don't include bonuses, which run $15-60k (or higher) depending on hours billed.
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Old 06-17-2008, 11:59 AM   #127
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Re: Taxing the rich - what is the cutoff?

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What point of mine are you disagreeing with? I'm fairly certain my post said nothing about people earning 250k deserve to get taxed more.
Wasn't disagreeing, was just quoting you..
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Old 06-17-2008, 12:00 PM   #128
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Re: Taxing the rich - what is the cutoff?

I found my daughters 4 year degree cost use around $60,000 going to an in state school. She just graduated this year and has found her first job making $36,000 plus benefits. So while thats not a ton of money it is giving her a good start. When she was looking at schools I gave her the choice of any in state school (not private) which really helped with cost. In Va. we have pretty good schools and I just did not see an advantage of going out of state but I'm sure thats not true for all people.
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Old 06-17-2008, 12:01 PM   #129
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Re: Taxing the rich - what is the cutoff?

Probably works for the state or government. Them lawyers get squat diddy. But even at major/minor law firms they still don't make enough to warrant 250K education tab.
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Old 06-17-2008, 12:07 PM   #130
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Re: Taxing the rich - what is the cutoff?

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Probably works for the state or government. Them lawyers get squat diddy. But even at major/minor law firms they still don't make enough to warrant 250K education tab.
To be fair, for SGG that included 4 years undergrad, which probably accounts for half of it.
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Old 06-17-2008, 12:11 PM   #131
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Re: Taxing the rich - what is the cutoff?

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These numbers don't include bonuses, which run $15-60k (or higher) depending on hours billed.
OK thanks for that info. I had no idea the average lawyer made so much money.
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Old 06-17-2008, 12:14 PM   #132
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Re: Taxing the rich - what is the cutoff?

I remember a professor I had early on in college pulled me aside once and suggested I should look into going to law school. I should have listened.
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Old 06-17-2008, 12:22 PM   #133
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Re: Taxing the rich - what is the cutoff?

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OK thanks for that info. I had no idea the average lawyer made so much money.
The dilemma is that, in order to get those jobs, you have to either attend a top 10 school (which in most cases will set you back $140k+), or be at the top of your class in a top 50 school (which can still cost you $140k+).
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Old 06-17-2008, 12:26 PM   #134
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Re: Taxing the rich - what is the cutoff?

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The dilemma is that, in order to get those jobs, you have to either attend a top 10 school (which in most cases will set you back $140k+), or be at the top of your class in a top 50 school (which can still cost you $140k+).
OK yeah, now it's starting to make sense.

I found this source for attorney starting salaries in the US, it's definitely not in the 6 figures. I guess to land a job at a "major" firm you need, like you said, top credentials:

PayScale - Lawyer Starting Salaries, Average Salary for a Lawyer

And this chart here seems to indicate why you guys in the DC area would be used to very high lawyer salaries:

PayScale - Attorney / Lawyer Salary, Average Salaries by City
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Old 06-17-2008, 12:32 PM   #135
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Re: Taxing the rich - what is the cutoff?

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OK yeah, now it's starting to make sense.

I found this source for attorney starting salaries in the US, it's definitely not in the 6 figures. I guess to land a job at a "major" firm you need, like you said, top credentials:

PayScale - Lawyer Starting Salaries, Average Salary for a Lawyer

And this chart here seems to indicate why you guys in the DC area would be used to very high lawyer salaries:

PayScale - Attorney / Lawyer Salary, Average Salaries by City
No question. NYC and DC are the lawyer capitals of the country. NYC tends to set prices for the rest of the country, in terms of when salaries increase. Salaries have skyrocketed lately. 10 years ago, starting salary was around $85k in DC.

So, it's possible that my world-view is skewed when it comes to this. About half the people I know fall into the mid-30s, 2 kids, household income over $250k (lawyers, IT, investment banking) category. All of them can afford the increase, but only a few would I categorize as affluent, and none would I describe as "rich" or "wealthy".
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