Newsgroups: bit.listserv.politics
Date:         Thu, 16 Apr 1992 20:18:15 EST
From:         K=A*T <MEC038@UKCC.UKY.EDU>
Subject:      Re: Tax Policy
              15 Apr 1992 17:36:30 EDT from <DGS4@PSUVM.PSU.EDU>

Now this really pisses me off....

From:         DGS4@PSUVM.PSU.EDU

> There is a big difference between marginal and average tax rates.  The
> last computation by KAT was average tax rate.  Jay was referring to
> his marginal tax rate.

No, dah!  As if anybody indicated that there wasn't a "big"
difference.  Everybody on this list who participated in this
recent debate in one way or another indicated their understanding
between the marginal tax rate and the average tax rate.  The only
person who did not understand this was Jay.

And this business about "Jay was referring to his marginal
tax" is pure nonsense.        This coming from Jay at least could
be seen as self-defense but coming from a third person is a bit
too much to take.  Let's look at what Jay said (my apologies for
repeating it.)

Jay said:
> This year, I apid 28% income tax plus 15.5% self employment tax, for a total
> of 43.5% in come tax.  Think about your annual salary. Now, imagine writing a
> check to uncle sam for 43.5% of it.

Did you read it correctly?  Now, read it again.  Jay is saying
"Think about your ANNUAL SALARY, Now, imagine writing a check to
uncle same for 43.5% of it."  (cap is mine).  THAT is average tax
rate.

And of course my calculations has been based on the "average"
tax rates (again, no dah!).  I did it that way because that was
what Jay was implying.  Not only I am completely familiar with the
difference between marginal rates and average rates I teach them
to my students -- of course the subject is not economics rather
it is thermodynamics.

> And  Jay is correct (roughly).  Someone else had the more precise
> numbers posted which subtracted out the half-credit you get for
> being self-employed.  The marginal federal tax rate (including
> SS and medicare) for a person who starts in the 28% bracket
> is about 41%.  If you include state tax and local tax (=4.1% in PA)
> you have a marginal tax rate over 45%.  That rate drops
> dramatically once your total income exceeds about $55,000 because
> then you've exceeded the current cap on SS payments and you no
> longer have to pay the SS portion of the tax.(Medicare keeps going
> up to about 100,000).

Absolutely incorrect: Jay was DEAD wrong at first.  It was after
two days and half a dozen posts that he realized he made a mistake.
Now, as it is the trademark of Jay (and most of the regulars on
this list know about this) he would not accept he is wrong and
would have the nerve of claiming that *I* did not understand this
concept.  As I said I kinda understand and am used to this tactic by
Jay.  But for a third person to say this; that is too much.

And what is all this elementary explanations that you are
performing?  As I said everyone who participated on this
topic demonstrated their knowledge regarding average and
marginal tax rates and their differences (except Jay of course).
So lay off of treating us like Jays, er, morons!

> To give you an example, as a professor I make about $40,000.  I earn
> about $12,000 gross from consulting which is self-employment income
> Each year I set aside about 45% of that so that come April 15 I have
> money to pay taxes on that.

Wow!  You don't give up, do you?  Now you are fool-proofing your
thesis by giving examples?  We are neither stupid not your students.
As I said we are all aware of the difference between marginal and
average tax rates.

> For those who don't believe those calculations or who try to use KAT's
> 17% figure, I'd suggest you try it yourself.  The first time I did work
> as a graduate student consulting for an independent company, I ended
> up borrowing more than $1,000 from my parents to pay my taxes because
> I had only set aside 28% of the gross income!

That is it!  I have had it up to here by this patronizing behavior.
Nobody tried to use "KAT's 17% figure."  As I have said repeatedly
everyone on this list who participated in the debate showed their
competency.  The proof is in the accuracy of every one of their
calculations.  And KAT's 17% figure is only correct for an income
of $45,000 with the status of married filing separately with no
dependent deduction.  Any other case would result in a different
number.

I know I showed a lot of intolerance in this post.  Now, it would
be a pity  if  you misunderstood my position because you did not
read my posts carefully, but as I said you pushed the wrong button.

I hope this post would not scare you away.  Except Jay, most of
us are tolerant people.  So I hope you would stick around and
contribute to the debate on this list.

Have a nice day!   :-)

> Dennis Shea

--KAT
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