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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: GraceZ who wrote (160027)	10/25/2008 2:34:28 PM
From: neolib	Read Replies (1) \| Respond to of 306849

Lets just see about your 5% FICA claim for the lower 50%?? First off, the table in your link is not clear about what "Payroll tax" is. In general Payroll taxes are ALL taxes withheld from the employee's paycheck, so that includes FICA as well as federal income tax and state tax. Given the graph title, I'll make the leap of faith that The Tax Foundation (whoever they are?) was just sloppy with their labelling, and not their data, then a little bit of work gives the following: Total Payroll (FICA??) tax = 40,568 Payroll tax from the lower 50% = 7,967 (splitting middle quint) Fraction in the lower half = 19.6% This is certainly lower than what I guessed at 33%, but it is 4x what you claimed. So, could you explain in more detail your 5% of FICA claim. As for my own errors, I was well aware that 46K was the upper end, and not the average, but I also placed all the upper bracket at 98K (hence my 1/3 vs 2/3). I did fail to consider what the distribution of single vs dual earners do on the upper end, since that raises the effective cap. It is true that the lower 50% has perhaps a large fraction (what I don't know) who are in fact not wage earners at all (retirees) or welfare, and that clearly shifts things down as well. Still, 20% vs 33% or 5% vs 20%. That seems to be the current metric of our relative ability to eyeball things, unless you have a 2'nd pass at supporting your side. The bottom line remains as I claimed, adding the 15% tax rate to the tables and renormalizing for the same total tax will DECREASE effective rates at the low end, and increase it at the high end for the obvious reason that it tacks 15% on across the board, all the way up. ESPECIALLY if you consider that the low end has some folks who don't pay either income or FICA taxes because their income is welfare of one flavor or another yet their numbers bias the 50% of household figures you cited.