04-16-2003, 02:36 PM
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#10
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Quote:
Originally posted by Timber Loftis:
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. 
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Hmmm, well I am hard pressed to explain an instance in the 1980's when I actually got a 5% raise, but increases in the federal, state and local taxes caused me to actualy take home less than I had prior to the raise......don't remember the specifics...just remember my shock at a smaller paycheck [img]smile.gif[/img] .
[ 04-16-2003, 02:37 PM: Message edited by: MagiK ]
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