Only for the middle class. The poor have deductions/credits that offset most taxes. While the rich have beneficial tax rates for their main source of income (i.e. captial tax rates), caps on some taxes (i.e. incomes above $176k no longer pay any social security taxes), and the old fashion it just so much easier to cheat on taxes when you rich.
The net pay is 54% in this example, not the tax. The tax situation really depends on the earner and what state they live in. Someone single living in a relatively high income tax state might have an overall rate of 18% or more, just for the tax part.
Other deductions from gross income include Social Security & FICA. And if there is company ‘provided’ health insurance there is likely additional cost to the employee as well.
Many people also put pre-tax money in retirement or health care savings programs. These are deductions from gross income, but are staying in the account of the earner.
I ran the numbers for my jurisdiction. For just tax, it comes out to 21%. If you add employment insurance, the socialized healthcare premium, and government pension (these are all mandatory) it goes up to 27%.
If you invest 20% of your take-home in retirement, that brings you to a 44% deduction, but I gently question whether you should do that if you’re struggling to put food on the table.
Wait, what? $65,000/yr but $680/wk take-home? That implies an effective tax rate of 46%*… Are taxes in America really that high?
*46% not 54%
Only for the middle class. The poor have deductions/credits that offset most taxes. While the rich have beneficial tax rates for their main source of income (i.e. captial tax rates), caps on some taxes (i.e. incomes above $176k no longer pay any social security taxes), and the old fashion it just so much easier to cheat on taxes when you rich.
The net pay is 54% in this example, not the tax. The tax situation really depends on the earner and what state they live in. Someone single living in a relatively high income tax state might have an overall rate of 18% or more, just for the tax part.
Other deductions from gross income include Social Security & FICA. And if there is company ‘provided’ health insurance there is likely additional cost to the employee as well.
Many people also put pre-tax money in retirement or health care savings programs. These are deductions from gross income, but are staying in the account of the earner.
I ran the numbers for my jurisdiction. For just tax, it comes out to 21%. If you add employment insurance, the socialized healthcare premium, and government pension (these are all mandatory) it goes up to 27%.
If you invest 20% of your take-home in retirement, that brings you to a 44% deduction, but I gently question whether you should do that if you’re struggling to put food on the table.