What’s marginal tax bracket? The bracket determines how many cents you get from every additional dollar that you earns. My marginal income tax bracket is about 25% federal + 9.3% CA state = 34.3%, which is more than one third. Despite the original intention of our US progressive tax system, the payroll tax (social security & medicare taxes) of about 7.65% actually makes our tax system regressive, especially for the working people. To illustrate this, I’ve done a couple of plots of marginal tax bracket for all the income and payroll taxes that you need to pay, starting from the very first earned dollar.
[plot for single, couples, couples with children]
As you can see, the marginal tax bracket is actually higher in the range of most working people. Our government is really placing the tax burden on the majority of the working class. And even with all the surpluses of social security and medicare taxes collected, our US government still out-spend the last dollar and shows a big red deficit in the final unified budget.
I have constructed a tax calculator for you to accurately calculate your taxes. You’re welcomed to use it for your tax planning, or simply experimenting.
