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What’s in your wallet?
Answer: Not much after Uncle Sam takes his share. Consider this 2007 Federal Tax Rate Schedule (single):
| If taxable income is over– | But not over– | The tax is: |
|---|---|---|
| $0 | $7,825 | 10% of the amount over $0 |
| $7,825 | $31,850 | $782.50 plus 15% of the amount over 7,825 |
| $31,850 | $77,100 | $4,386.25 plus 25% of the amount over 31,850 |
| $77,100 | $160,850 | $15,698.75 plus 28% of the amount over 77,100 |
| $160,850 | $349,700 | $39,148.75 plus 33% of the amount over 160,850 |
| $349,700 | no limit | $101,469.25 plus 35% of the amount over 349,700 |
Are the wealthy paying enough? Ignoring other taxes and exemptions, one’s effective tax rate could approach 50%. How? Let’s add it up. 35% on income over $349,700 plus your FICA share (7.65%) plus the FICA share of 7.65% indirectly paid through your employer. This 35% plus 15.3% equals 50.3%. So, let’s add the employer share to your income and we get: 35%+15.3%/income+7.65%=46.7%. (Note: the SS tax over approximately $100,000 ends but the combined Medicare share of 2.9% does not stop at this income level).