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People don’t understand tax brackets.

BannedEpisode

BannedEpisode

Member
Oct 28, 2017
221
I feel like I'm taking crazy pills every time someone says that they will make less money if they get a raise or thinking a top earning 70% tax rate means the government takes the whole 70% of your income.

Does this drive anyone else nuts?
 

mrmoose

Member
Nov 13, 2017
21,175
BannedEpisode said:
I feel like I'm taking crazy pills every time someone says that they will make less money if they get a raise or thinking a top earning 70% tax rate means the government takes the whole 70% of your income.

Does this drive anyone else nuts?
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I mean, there are edge cases where this happens. Going up a tax bracket can make you ineligible for certain deductions, for instance. But I have a hard time believing most people really think they'll make less money if they go up a tax bracket.
 
Wired

Wired

Member
Nov 2, 2017
14
Not really. I've accepted that in general people are stupid beyond belief, and happy to stay that way as well. I can't be bothered.
 
Wolf

Wolf

Member
Oct 25, 2017
4,846
I'm always surprised at the amount of people who don't know what the standard deduction means to your taxable income and what bracket you land in.
 
Protein

Protein

Member
Oct 27, 2017
2,030
Most conservative media pundits run with this. They're usually the ones who consider themselves economic experts.
 

Deleted member 47843

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Sep 16, 2018
2,501
Wired said:
Not really. I've accepted that in general people are stupid beyond belief, and happy to stay that way as well. I can't be bothered.
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Yep. Shit like that used to drive me nuts. But as I got older I just accepted that most people are willfully ignorant. Best you can do is just surround yourself with intelligent people and ignore the dumb masses as much as possible.
 
Clockwork

Clockwork

Banned
Oct 30, 2017
864
Wisconsin
I've literally been witness to someone saying they didn't want a raise because they are going to lose money if they get pushed into the next tax bracket.

I don't get why people don't understand such a simple concept.
 
Aeana

Aeana

Member
Oct 25, 2017
6,925
I think we have generally failed at educating people about progressive taxes, and the Republicans wouldn't have it any other way. They want people to be outraged at the notion that rich people should be taxed at 70+%.
 
Finale Fireworker

Finale Fireworker

Love each other or die trying.
Member
Oct 25, 2017
14,710
United States
My father was one of those people. He would say he "made less money" after his promotion.

When, in actuality, what he paid in taxes simply increased proportionately to his income. So even though he also made more money, all he looked at was the fact he paid more in his taxes, because he was an imbecile. All the actual money he made that he still had and/or spent apparently didn't count. Because I guess people expect their numbers to always be the same? I don't even know.

And I can understand being confused about this when you're like, 20, and have never made more than $25,000 a year. But he was an adult in his fifties with three houses.
 
Koukalaka

Koukalaka

Member
Oct 28, 2017
9,283
Scotland
I remember having to explain how this works to someone about ten years older than me. Do some people just not look at their paycheck ever?
 
kswiston

kswiston

Member
Oct 24, 2017
3,693
Clockwork said:
I've literally been witness to someone saying they didn't want a raise because they are going to lose money if they get pushed into the next tax bracket.

I don't get why people don't understand such a simple concept.
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Secondary schools do a terrible job teaching basic skills that all adults will need in life. Hence, you have STEM majors in college who can't manage a credit card or student loans.

And a lot of people never learn. Their pay gets larger, but their ability to handle or understand their money is as bad as ever.
 
bremon

bremon

Member
Oct 27, 2017
7,853
mooshie78 said:
Yep. Shit like that used to drive me nuts. But as I got older I just accepted that most people are willfully ignorant. Best you can do is just surround yourself with intelligent people and ignore the dumb masses as much as possible.
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So true. Progressive taxation seems to break people's minds. It's such a simple concept yet so many people can't grasp it. People see "marginal tax rate" as the tax rate they pay on every dollar they earn, rather than the tax rate they'll pay on the next dollar they'll earn.
 
Ether_Snake

Ether_Snake

Banned
Oct 29, 2017
11,306
Clockwork said:
I've literally been witness to someone saying they didn't want a raise because they are going to lose money if they get pushed into the next tax bracket.

I don't get why people don't understand such a simple concept.
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Yep this is very common, it's the go-to thought for the average person getting a raise.
 

Deleted member 11985

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Oct 27, 2017
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I don't know anything about taxes, and I have zero desire to learn anything about it. I just follow the prompts on TurboTax.
 
thecouncil

thecouncil

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Oct 29, 2017
12,333
I think a lot of people are still about the trickle down and thats why they're against higher taxes for rich people.
 
808s & Villainy

808s & Villainy

Banned
Oct 27, 2017
42,700
When you think about it, there isn't a single mandatory class or course where you actually learn about tax brackets. You kind of learn them either from talking to others or Googling, but that requires you to be proactive. It's a bit bizarre how something so crucial is entirely optional knowledge
 
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Netherscourge

Netherscourge

Member
Oct 25, 2017
18,904
The GoP has managed to convince a lot of morons that taxes for 1 bracket = taxes for everyone, even when it means LESS taxes for other brackets.

Trump uses blanket projections all day long to rile opponents and mislead his base with these types of claims. Taxes being one of his biggest lies.
 
Davilmar

Davilmar

Member
Oct 27, 2017
4,264
Forget that. People not understanding an effective tax rate vs. marginal drives me even crazier. Especially with the 70% nonsense I hear from conservatives.
 
Pagusas

Pagusas

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Oct 25, 2017
2,876
Frisco, Tx
OP, what you have to understand is the majority of people are stupid, brainwashed sheep that will repeat the first bit of information they receive as if its the gospel. Its not limited to white male republicans either, its all over, every race, gender and culture. People are idiots. On this board alone you can go into any topic and see loads of idiots or sheet. Its what the general person is and does. Once you get past that understanding the world becomes a hell of a lot easier to understand.
 
Tetrinski

Tetrinski

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May 17, 2018
2,915
Koukalaka said:
I remember having to explain how this works to someone about ten years older than me. Do some people just not look at their paycheck ever?
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At my work, paychecks have been consistently missing money for months. We had to explain to a woman on her fifties that she should double check the paycheck. She did, and she was missing an entire shift worth of money. Boss promises to add to next paycheck, doesn't, and she tells us that she prefers to let it go. At that point I didn't know what to say anymore.
 

mrmoose

Member
Nov 13, 2017
21,175
I can understand people not understanding taxes in general, or at least all of the deductions.

I mean, people get really excited about a big tax return. That's about as backwards as you can get.
 
Chaosblade

Chaosblade

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Oct 25, 2017
6,591
Anecdotally, I think more people don't understand tax brackets than do.

And then of the minority that do, part of it is moronic flat taxers that don't want progressive taxes.

mrmoose said:
I can understand people not understanding taxes in general, or at least all of the deductions.


I mean, people get really excited about a big tax return. That's about as backwards as you can get.
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Most people are terrible with money and would have just wasted it over the course of the year. For some it basically works like a savings account so they can use that big refund to pay for a vacation or large purchase they otherwise couldn't afford since they would have blown all that money.
 
Sunster

Sunster

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Oct 5, 2018
10,011
Well, we are taught absolutely nothing about taxes during our 12 years of grade schooling. I surprised that anyone is surprised that people (in the US) don't know about taxes.
 

Deleted member 46429

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Like, yes, the average person in the US doesn't understand how tax brackets work.

But also, this isn't information that is taught anywhere in school. Maybe your government/econ class might slip it in somewhere, but that's about it. People learn this only if they take the initiative. And yes, the GOP absolutely exploits this misunderstanding to push against policies that tax through rich.
 

Deleted member 733

Banned
Oct 25, 2017
3,686
OP, you might want to spell out the concept in case anyone on the forum doesn't fully understand it either.

I'm not an accountant but my understanding is that if you fall in the 70% tax bracket or whatever, only the income over the cutoff point is taxed at that rate. So if you earned $100,500 and the cutoff was $100,000 you would be taxed 70% on $500.

At that point I'm unsure how it works. I would guess it keeps chaining down, but for all I know everything else you earn (the $100,000) might be taxed at the next lower rate. Someone who knows tax codes well please correct me.

Also as someone pointed out, earning more money may also affect which deductions you are eligible for, which complicates matters.
 
Kill3r7

Kill3r7

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Oct 25, 2017
24,403
People hate taxes because they don't understand them. Hence why empty rhetoric is so effective.
 
Paltheos

Paltheos

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Oct 25, 2017
1,679
BannedEpisode said:
I feel like I'm taking crazy pills every time someone says that they will make less money if they get a raise or thinking a top earning 70% tax rate means the government takes the whole 70% of your income.

Does this drive anyone else nuts?
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Not too much. This is an old TV trope that I think is the real culprit (although where that originated I have no clue).

It is too true there are fringe cases where this is actually true though. AMT springs to mind immediately.
 
Manmademan

Manmademan

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Aug 6, 2018
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kswiston said:
Secondary schools do a terrible job teaching basic skills that all adults will need in life. Hence, you have STEM majors in college who can't manage a credit card or student loans.

And a lot of people never learn. Their pay gets larger, but their ability to handle or understand their money is as bad as ever.
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No they don't. If you pay attention in basic math you can figure out how interest rates work and credit cards and student loans are trivial.

Unless you have a learning disability, you have all the skills you need to handle this out of high school.

The issue is willful ignorance and laziness. People don't want to put effort into figuring things out, they want an easy answer. You could figure out a 1040ez on your own without ever having seen one with a high school education, but H&R block make millions on people who pay them for simple returns regardless because "its confusing"
 
SteveWinwood

SteveWinwood

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Oct 25, 2017
18,676
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Manmademan said:
No they don't. If you pay attention in basic math you can figure out how interest rates work and credit cards and student loans are trivial.

Unless you have a learning disability, you have all the skills you need to handle this out of high school.

The issue is willful ignorance and laziness. People don't want to put effort into figuring things out, they want an easy answer. You could figure out a 1040ez on your own without ever having seen one with a high school education, but H&R block make millions on people who pay them for simple returns regardless because "its confusing"
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I don't know how smart you think the average person is, but they're way dumber than you're giving most people credit for.
 
dabig2

dabig2

Member
Oct 29, 2017
5,116
mrmoose said:
I can understand people not understanding taxes in general, or at least all of the deductions.

I mean, people get really excited about a big tax return. That's about as backwards as you can get.
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I actually do wonder how many people realize that their big tax return is literally just their money coming back to them from overpaying all year after being used by the government for what is essentially an interest free loan.
 
Fantastical

Fantastical

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Oct 27, 2017
5,365
There is a vested interest in muddying the waters about the tax system so it's not super surprising.
 

mrmoose

Member
Nov 13, 2017
21,175
Manmademan said:
No they don't. If you pay attention in basic math you can figure out how interest rates work and credit cards and student loans are trivial.

Unless you have a learning disability, you have all the skills you need to handle this out of high school.

The issue is willful ignorance and laziness. People don't want to put effort into figuring things out, they want an easy answer. You could figure out a 1040ez on your own without ever having seen one with a high school education, but H&R block make millions on people who pay them for simple returns regardless because "its confusing"
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They absolutely need to do a better job talking about credit cards and debt at a high school level, though, especially as a real world application of math. Yeah you could figure it out if you know math, but things like taxes and debt (and let's include car and house buying) and savings are super important, and I don't know why there's not more of an emphasis on it. Unless there is now.
 
Manmademan

Manmademan

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Aug 6, 2018
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SteveWinwood said:
I don't know how smart you think the average person is, but they're way dumber than you're giving most people credit for.
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Dumb? No, the average person can figure out basic percentages if they're sufficiently motivated.

Too disinterested or lazy to apply themselves? Absolutely.

The point is even if you DID teach a class about loans and tax brackets, virtually no one would retain the info and you'd be right back where you started.

There is a shocking amount of people that never pick up a book again after high school and are proud of it. That doesnt mean they don't have the ability to read, they just refuse to. Give them something moderately complex in print, they get bored and ask for the YouTube video.

The problem isn't being "dumb" it's just willful ignorance.
 
DarthWalden

DarthWalden

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Oct 27, 2017
6,030
Understanding even basic taxes should be in every school curriculum, its important, useful and practical knowledge that everyone should have an opportunity to be taught.

Growing up, there are so many people that would spout ignorant or incorrect things about having to pay taxes that it gave me an incorrect idea of how they worked. People would claim things like putting them in a higher bracket would mean they would have to pay more taxes than the raise would cover or that it they can just claim whatever expense they had to their business basically making it free.

Thankfully I could never afford an accountant and was forced to do my own taxes despite it being more complicated than your average tax return, this gave me a fairly deep understanding of how the tax system works at least here in Canada.
 
SteveWinwood

SteveWinwood

Member
Oct 25, 2017
18,676
USA USA USA
Manmademan said:
Dumb? No, the average person can figure out basic percentages if they're sufficiently motivated.

Too disinterested or lazy to apply themselves? Absolutely.

The point is even if you DID teach a class about loans and tax brackets, virtually no one would retain the info and you'd be right back where you started.

There is a shocking amount of people that never pick up a book again after high school and are proud of it. That doesnt mean they don't have the ability to read, they just refuse to. Give them something moderately complex in print, they get bored and ask for the YouTube video.

The problem isn't being "dumb" it's just willful ignorance.
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there's a point where willful ignorance = dumb so
 
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