Actually, I think I should cut-and-paste that post into a Word document, as I'm sure it's an explanation/argument I'll be called upon to cough up again in a few months. I think I got it all right. I'm not a tax attorney, but I did take a class on income tax, as did my wife, and we do our own taxes. Thanks for the kudos, though, and let me know if you have other questions which arise as a result of what I wrote.
Oh, and I will note that everyone uses the language to push their agenda. "Double-taxation" is a word that has been heavily demonized by business, and it is therefore basically created a misunderstanding amongst people. There are many tax myths.
Here's one: "I can't afford a raise, I'll go into the next tax bracket." WRONG. Let's say the 20% tax bracket cuts off at $30K and becomes the 25% bracket (hypothetical numbers - not currently accurate, but good for a lesson). Well, you don't pay the 25% rate on all your money, but ONLY on that part of the money that exceeded the lower bracket. In other words, you only pay 20% on the first 30K, and then you pay 25% on every dollar above 30K. Perhaps the most common misunderstanding with taxes. Despite what we may like to think, the tax code does NOT discourage earning more money.
[ 04-16-2003, 02:25 PM: Message edited by: Timber Loftis ]