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Politics : John McCain for President -- Ignore unavailable to you. Want to Upgrade?

To: chalu2 who wrote (563)	2/22/2000 12:57:00 PM
From: Peter O'Brien	Respond to of 6579

Chalu2, assume the following: phase-out range for child credit between 100K -> 110K 7 children 31% "regular" tax rate Now, with a family income of 100K, let's compute the taxes owed: "regular" tax = 100,000(0.31) = 31,000 child credit = 1,000(7) = (7,000) ---------------------------------------- TOTAL TAX = 24,000 Now, assume the father gets a $10,000 raise, and the family income is now 110K. Let's compute the taxes owed: "regular" tax = 110,000(0.31) = 34,100 child credit = 0 (phased-out) --------------------------------------- TOTAL TAX = 34,100 So, the family's total tax bill increases by $10,100 as a result of getting a $10,000 raise. The marginal* rate in this case is 101%!! The father would be better off declining his raise!!