Theoretically, moving up in tax brackets is a good problem to have, because that means you are raising your income, so it's a net gain. But then tax season comes around (as it does on April 18, when taxes are due unless you're in California or another disaster-stricken area this year- figures America would let people procrastinate further and further. It used to be April 15, now it's April 18, and now any disasters can stretch the tax day back) it kind of makes me wonder...why am I paying so much tax?
MJ is very very upset around this time of year every year, despite all the Easter eggs and flowers and tulips and cherry blossoms- she's upset about paying so much tax on her income because she has the misfortune (at least, from a tax standpoint) to be married to me, and our married filing jointly income launches us into a completely different tax bracket than her income on her own would be. I didn't notice this before as a college student or when I was a spendthrift about money, but the American tax system is funky (on top of having to pay both federal AND state tax, not to mention local taxes, etc.). The federal income tax brackets are just 7 levels: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Notice something about those numbers? The first 3 numbers should you remind you of a math problem on the SAT or a sequence in Jeopardy: it's a perfect Fibonacci sequence! 10+12= 22. Math nerds probably love it, but why is it such a huge leap forward? I get the arguments for a progressive tax rate to put more of the tax burden on the rich and less on the poor, and the rich can afford to pay taxes, etc., but this isn't a "progressive" sloping tax, this is like jumping steps (MJ just bought a stepper this week to help her exercise indoors). Basically if your family (household income) for 2022 exceeds $81,051, you leap up from the 12% tax bracket to 22%. That's 10%! Someone who made $82,000 of taxable income is out an extra $8,200 than if they stayed at 12%. That's substantial, and so is the jump from the 24% to the 32% tax bracket, the borderline set at $329, 850. I guess the system has no sympathy for households who earn more that much in the $300k range, but as someone who's made $300k not necessarily in one year but over the course of a little more time than that, that goes quick! It's not like I'm pocketing the $300k per year so I can buy Teslas, travel to the Bahamas, and buy a private yacht. Frustratingly, for those in that 32% tax bracket, the max tax bracket you can be is 37%, so the richest billionaires are paying only 5% more in federal tax than you, no matter how much they make! And we all know the billionaires have enough accounting professionals running doing accounting jiujitsu and shell corporations that they don't pay that much tax. As usual, it's the middle class that's taking hit for this. As the motto I've developed over the years go, "you either have to super rich in this country or super poor." It's tough to be stuck in the middle. Luckily, despite Joe Biden's very public hard line against the wealthy (who he defines as those earning $400,000k or more), the 2023 tax brackets (for next year's filing) will be a little more lenient due to inflation, but the percentages are still the same (10%, 12%, 24%, 32%, 35%, 37%), it's just the thresholds go up a little bit so you might slide down one tax bracket with the same amount of money earned.
Other the fact that I'm stuck paying back a tax debt this year (no refund! It's like reverse Christmas every year coming around and realizing not only do I get no presents I owe the IRS some presents) I find doing taxes somewhat interesting: I use TurboTax software, but I find the math part is fun for me; I like to extract the sum the employer withheld from my paycheck and figure out if they deducted too little or too much; TurboTax is just good at filing out the bubbles on the tax form and doublechecking your math; it admittedly gets a little tough even for people who are good at tax. I don't take it as hard as MJ because I'm used to the US taking out tax every year before you even touching it, but yea after reaching a higher tax bracket, I start realizing how much I'm paying to both federal and state governments every year.....for what? Where is that money going? My high school English teacher once said, "young people start as liberals, but gradually as they grow older they turn into fiscal conservatives...." mainly because of the taxes and fiscal policy; maybe he was predicting my future. I can understand where he was coming from now; the reality hits home more when it's real money we're talking about, and when the taxes are used to fund wars we didn't agree to and not used to save the climate or victims of gun violence. MJ has weird patients who yell at her sometimes saying, "I pay your salary and the hospital!" I feel like that patient now, yelling at the void that is the bureaucracy: I pay your salary but what are you doing with it?
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