How tax brackets actually work
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- Опубліковано 17 січ 2019
- There is a common misunderstanding about how tax brackets work in the US, and it’s causing us to have uninformed debates about taxes.
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The TEx crew took a deep dive into Representative Alexandria Ocasio-Cortez's proposal for a marginal tax rate of 70% for top earners in America. A lot of people are upset, and even more have no idea how it works.
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When Rep. Alexandria Ocasio-Cortez proposed a 70 percent top income tax rate, many conservatives started saying Democrats wants to take away 70 percent of Americans’ hard-earned money. This is not only wrong, but it takes advantage of something Americans have long misunderstood: tax brackets. It’s time to fix that with a simple, paper-made video.
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We've made a follow-up to this video, that examines the reasoning and debate around a 70% marginal tax rate: ua-cam.com/video/bWRO-M47eCY/v-deo.html
Why did you add a political jab to the republicans at the end without adding the 4% tax bump that Bernie wants. Most people I would assume fall under 22% bracket and currently pay 22% on that. Bernie would bump it to 26%
Not to mention taxing people who make the most money 70% instead of 37% would make them want to reduce costs (aka jobs). Cutting their taxes while still keeping them higher than the average rates still promotes growth.
@@MercJB Because this is Vox.
Jake M
The 4% increase is for Medicare for all, so you likely save money because the 4% increase isn’t as expensive as private insurance with premium costs and add on costs
@@jarjarbinks4744 you are being lied to
This is one of those things everyone should know, but isn't taught in school for some reason.
@@AnHeC ". How can anyone NOT read up on taxes?!"
For most people, there is no reason to, nor does it even occur to them. Quite frankly, there has never once been a point in my life where I felt the need to research this in detail. Taxes are broken down on all tax forms and pay stubs. There really isn't a reason to look past that for most people.
Plus it isn't a issue of "not knowing" for most people but rather being misinformed. Most people think they understand tax brackets, when in reality they don't. When someone thinks they understand something, they rarely peruse researching it.
For someone who likes to pretend they are an intellectual, you sure are naive and ignorant.
How would someone know to look for something that they did not know existed may I ask
haha well put lfront
@#BLINK JJRL it should be taught in school, or at least offered. maybe a simple basic life skills class.
@@AnHeC You're a headass
Waaiit, you're saying that people debate about things that they don't understand at all? I'm pretty sure that never happens.
Neverrr lol who would do such a thing
Welcome to America!
Especially on the internet!
Yes they do understand it... At least they say so
Ur forgetting its america. The politicians there r just out of this world.
This "Tax Bracket" system is how 99% of the developed coutries use. Yet, too many people don't understand this basic concept.
We need to teach this kinda stuff in Elementary School Math class.
We know how taxes work, also US has low taxes compared to Europe countries and there are other taxes not taken into consuderstiobs, they also don't talk about the effects of high taxes in the economy, specially for corporations
Why do we need to know they are taking it out of our checks anyway
@Flame Not sure if Germany is a developed country, but we don't have such tax brackets. If you are in the highest tax class, ALL of your income is taxed at 42%. And if you aren't married and have no kids that tax class starts at roughly 60.000 $ per year. Plus, we have a 7% sales tax on groceries and a 19% sales tax on everything else. And with every gallon of gas, almost 50% of the price is taxes and fees. And, and, and...just saying.
@@javadose317 it is relevant - people can misrepresent the tax brackets to make an idea look bad, such as saying a new tax policy will cause a pay rise to cost you, when it never can. Tax is a very important issue and different people have very different ideas about it
we need a class in high school for this stuff, basic living class, its mandatory before graduating
Explaining that didn't seem very taxing at all.
Very punny
A pocket full of information
I see what you did there
My cat is making a bit of a bracket right now, she hates puns.
This is legit the first time I understood tax brackets... I also never assumed I knew how they worked, simply that I had no idea how they worked.
I hope you never voted in your life then. I think it's more responsible of a person not to vote if he doesn't understand even the basics such as tax brackets.
@@adamnagy1832 yep.
Yea
But now he knows. And knowing is half the batlle.
There's a mathematical error in the visualizsation. They've multiplied the income with percents instead of a decimetrical numbers.
The number of people who insist that they got pushed into the next tax bracket and actually lost money from a raise/bonus somehow is astonishing. And they always insist they're right about how taxes work.
I know exactly what you mean, it's mad. I've heard of someone who refused a raise thinking it would push them into the next bracket and overall they would actually lose money so they refused it.
ppl are dumb and math is hard.
I actually heard this a million times from my dad growing up. So it wasn't until i was an adult that i realized that's not how it works.
Raises come with more responsibility. It's not as simple as leaving free money on the table. Accepting more responsibility for a much lower raise due to the tax bracket is unquestionably an awful situation.
As part of a family with many entrepreneurs and business owners, this topic often comes up. Vox is technically correct about how it works, but let me put it this way:
You own a business. It's not nearly this simple (in fact, if I weren't simplifying it, the results would be even more distinct), but say you pay $100 per unit of any factor of production (labour, equipment, resources). Now suppose there are tax brackets at less than or equal to $3000 for 20%, and greater than $3000 for 40%. Bear in mind this is extremely simplified, hypothetical, and obviously exaggerated so that the chart doesn't run all the way across a few dozen rows. For every $150 dollars you earn, you need to use one $100 unit, leading to $50 net profit. Now, watch this:
I: W/out Tax: Tax: O: Net:
$1600. $2400. $480. $1920 $320
$1700. $2550. $510. $2040 $340
$1800. $2700. $540. $2160 $360
$1900. $2850. $570. $2280 $380
$2000. $3000. $600. $2400 $400
$2100. $3150. $660. $2490 $390
$2200. $3300. $720. $2580 $380
See how after it hits the bracket, the net gain, a lot of which goes towards growing the business to increase the Input (I), decreases, or at least doesn't increase as much. Yes, this is clearly exaggerated, but in real life, the effects are the same, albeit a lot broader, so the changes are harder to see at a glance (and I'm lazy and didn't want to do dozens of rows of calculations just to not even be read). Bear in mind that you definitely want a higher Input, because that means a few things:
A. Workers are paid more
B. More workers are employed
C. More is being bought from other companies to allow those companies to increase their own Input.
Hopefully this could help. :)
I had zero idea this is how taxes worked.
Aaron Glicco you still have zero idea, because Vox has zero idea.
Vox, like AOC, assume that Rich people just shut up and sit down like the rest of us. When you make that kind of money... and a pretty congressional nobody informs you that we are coming for your money, you just simply move. They won’t be here long enough for the government to actually collect the money, leaving the rest of us regular people paying for this impossible green proposal.
The existing tax rates on the rich are currently at tolerable levels.
@@jhuerd i understand it very well now, and no, you dont simply move, revoke your citizenship, job, status, and property. You dont just randomly trade nations dude. Plus any work you do in that country is STILL taxed by that country. I didnt know taxes were incremental instead of percentage based, but your statement represents one of even more ignorance. Taxing excessively rich people MORE at HIGHER RATES is not only fair, but morally right, financially right, and just makes common sense. Why do you care . I can guarantee with near certainty that you do not make more than 10 million dollars, more likely either a shill, or just plain dont understand how economics work
👌 You’re, right.....I have no idea what I’m saying. Perhaps, think of the French as an example of one possible reaction to exorbitant tax hikes.
The former French seem to think otherwise by their actions. They don’t like Smashed Thumbs either.
money.cnn.com/2016/04/01/news/millionaires-fleeing-france/index.html
@@jhuerd who cares if the rich move. Not like they were paying taxes to start with..
@@jhuerd other countries have higher marginal tax rates than here
The rich are welcome to leave any day lol
There is exit tax for denouncing citizenship
The top 1% don't pay taxes anyway and hoard their money in tax haven islands
You should probably also include that this is earned income tax and is not the same as capital gains tax or corporate tax. Some people dont seem to understand that either.
Mandeep sivia If I’m not mistaken capital gains tax works in a similar manner to this
@@howsyamomma2673 Ya if the asset was held for less than one year it will be counted as ordinary income and be taxed at the same tax brackets as this video. If the asset is held for more than a year it is taxed on different brackets, the highest one being at 20% for anything over, i think, $425 000.
Funny.. In Canada, you hear people complain that small business gets over taxed. That's wrong.. Tax on business is much lower than personal income.. And a small business can claim internet costs, some lunches, clothes, car. While the full time employee can't normally claim any of that. It's harder on the middle, full time, working class... I have a few friends who own businesses and brag how little tax they pay.
Even though it is harder on the FT working class, which I'm a member of, I'm not complaining about taxes.. It's the price we pay for a society.. I am just not one of the defenders of the rich, everytime the government talks about increasing taxes.. I say go for it..
@@HedelTorres yes and no. Small business owners get a few additional tax write offs but it doesn't make up for the fact that owners have to pay their own CPP, don't get EI, don't get health and dental insurance, don't get matched RRSPs or a pension, as well as a few other benefits that employees normally get. They have to pay for those things out of their own pocket or from their business earnings which reduces what they can take home. When added up small business owners are usually at a disadvantage compared to employees. Unless of course they go to a shady accountant who writes off things they know they shouldn't be. But then that's tax fraud, and you can end up in jail. Those small business owners bragging about how little tax they pay, those are either people who actually made very little money, or are at risk of landing themselves in jail.
@@HedelTorres Yeah, they get to write off costs for the business. The internet and car costs have to be used for the business. You dont just get a tax free car as a business owner?
Taxpayer: "Nice tax bracket system!"
Lady liberty: "Thanks! It has pockets"
LOL! Well played sir.
this is a shamefully under-liked comment
Can someone explain it?
@@calvinhoward3808 women's clothes often don't have pockets, or have fake pockets or some other bullshit, so we often take pride in any pocket-y clothing - OP related the tax pocket system spoken about in the video to this clothing problem. Hope that makes sense c:
Calvin Howard r/woooosh
Just to show you all the math clearly.
The person who makes 84,000 USD
Pays 11,258 USD
So 13.4% of his income is his effective tax rate.
If he was paying 22% of his income he would have to pay 18,480 USD
A person who makes 200 million a year would be paying 70% on the upper 190 million dollars, which completely dwarfs the lower tax brackets. In practice, it’s almost 70%. The first 10 million can be ignored to simplify the math, as they are utterly irrelevant to someone who makes 9 figures. That’s why politicians say 70%. Everyone knows how tax brackets work. It’s just a simplification.
Aeon Yeah if you're a multi-millionare. So they're not being genuine when adressing the general population
@Aeon, the tweet shown at the end of the video clearly disproves your claim. And I've seen right wing articles clearly doing the math incorrectly. And of course your math really works if the person makes far beyond the last tax bracket anyway. If you're talking about someone making 20 mills (A LOT more people than ones making 200 mills) your simplification is just horribly wrong.
Aeon You're forgetting about deductions. All multi-millionaires are taking itemized deductions to the point where very few ever get taxed with a high effective rate. Many people in that range paid the AMT (alternative minimum tax) which was less than 30%. The 2017 tax law vastly reduced the number of people the AMT captures which effectively means there are billionaires that don't even pay 30% in taxes because of all the loopholes they are taking advantage of.
@@aeon9311 LOL! Literally everything about current right wing politics proves that people, in fact, don't have any idea how tax policy works.
I taught this to my students today in class. I'm a high school Algebra teacher.
Good on you for teaching them this
aren't you not allowed to do that as a teacher though?
That’s how tax brackets work.
Good meme.
Politician's policy proposals: *Lvl 1 Crook*
Vox 2 and a half minute video: *Lvl 35 boss*
But I have a plastic computer and you only know how to properly clean a metal computer
I love that they appreciated the meme
REALLY?
What we learned from this video:
*Tax brackets are actually tax pockets*
Evariste Galois we need to raise the top marginal tax pocket
@@Weatherboy1102 what percentage of their income do you think the people in the top 1 percent should pay. Not Marginal, effective.
I thought they were gonna say something new about a loophole or something, because as is it’s not complicated really, your money is taxed in sections, each a specific amount, once you go over the rest is taxed in the next section and rinse and repeat until all your income is taxed it’s not that complex
@@utkarsh4386 Modifying the marginal tax rate is what drives the effective tax rate, ehh. With the current tax code, I'd say adding 50% for overages following the current cap 37% after $510,300 is a good start (a few bucks after a citizen's millionth buck was taxed at normal rates, the next millions earned take a 50% hit vs the current 37%). This alone could double the standard deduction and put 10-20 thousand dollars back in the pockets of people who need it every year... at an unnoticed, welcomed by many affected, cost on people who make, not just one million dollars a year, but multiple millions.
@@jakehix8132 what if I told you that in many states, if you are in the top 1 percent, you already pay over 50 percent of your income in taxes when including state, sales, property and miscellaneous taxes.
I'm 16 and just looking at getting my first job, and this video actually really helped me understand more about taxes. I was really confused and I didn't understand tax brackets, but now I do. Thank you so much!! 😊
I didn't understand it at 16, but when I tried to do my own taxes the next year i did look it up and figure it out. now you know for tax time. (and if you barely work and only make a little money one year you do still have to file by the way)
Absolutely do not ask to get paid in cash. This means your workplace can get away with abusing you because they won't have to register you as an employee for tax purposes. They could get away with underpaying you, not paying you on time, not insuring you, or affording you penalties in line with the law if you're injured in the workplace. Saving a bit on tax is not worth being vulnerable to abuse
Jessica Ferry at 16 this won’t really apply to you as much. You will only get taxed for social security and Medicaid
Matt Parker That depends on how much you’re making. You can certainly pay income tax as a 16 year old, if you’re making more than $12,000 in the year.
appleintosh that’s why I said as much, my fault, I should have been clearer.
You hear people all the time say they don’t want a raise because it will put them in the next tax bracket. This is a huge problem and good to know for the future. Everyone should know this
When your animation maker went on a holdiay
i think they were going for fast over stylish with this one as it was an unscheduled appendix to the other video
Shivesh Poddar There’s a word for that, it’s animator.
@@Mittn lol
@@Mittn HAHAHAHAHA. For some reason I found that HILARIOUS.
It had to be simplified, so even middle school kids can decifer it
You tell me that grown adults don't understand tax brackets?
Sadly yes. It doesn't help that in America politics is religion.
Yes. And we have grown adults that have never pumped their own gas too.
Voted and elected house members don't understand tax brackets ....
Not people who don't pay taxes
@@mojominecraftmike like Alexandria Cortez
I've always wondered about this. I heard from soo many people that they are being pushed into a higher tax bracket and can see they are making less money. I personally never saw it but figured they must be at the turning point from one bracket to the next. Seriously thank you for the explanation!! It really helped me to better understand something that they really should teach you in school.
Awesome video - thank you!
In the debate around AOC's 70% top tax rate you hear loads of people not understanding this concept, even on the news, which confuses me as a British person. the way tax brackets work is common knowledge in the uk and we get taught about it in school
I was taught this in school as well here in the states. It's just that some of us don't pay attention. I'm sure that the UK has bad students too.
It's not widely taught in grade schools in the US. I learned about it because I took an accounting elective in high school.
We learned about taxes to in highschool. In mathematics. In australia
When tax prep was a manual form-heavy chore, I think more people, who did their own taxes, understood it. Nowadays, it's all software running Q&A wizards, even if you don't hire it out. The software does all the deductions and calculations. Even if you hire out, the tax preparers are running the same or similar software.
You say they are greedy, but Americans are the most generous people on the planet. That's a fact. Look it up.
Mind blown. Years of confusion gone in a couple minutes. 😅
@@AnHeC Who knows? Maybe some of us have Alfreds who do those for us, or maybe some of us didn't even finish High School! Or maybe I was one of the very, very few students who didn't pay attention to the very exciting tax class... Or even better maybe I am not from the U.S.A and taxes work differently? 🤔. Maybe you should ask the video creators why they wasted time making this video as it is expected that everyone understands taxes.
@@DeffecX If you are literate there are no excuses. Information is widely available. Not knowing is strictly your choice. You can google or even go to a library (even homless have smartphones, but let's pretend you don't, just for fun).
'Years of confusion' means it was on your mind and you were too passive/lazy to chek or even just ask someone. Country you are from means nothing.
Dariel Marte Awesome! Same here!
@dariel Same!!!!! 😅
@@AnHeC Lol, I fit right past your no excuses excuse. When I was a kid I wasn't allowed on the internet nor could I just drive over to the library on my own since well I was a child and while yes I could have looked for books in the library myself when I was taken there but let's be real, who does that. All I did was ask my dad about it and unfortunately he doesn't seem to have understood the concept of tax brackets so I was incorrectly informed until this video.
The brackets you had at the start of this video I think actually lent a more effective graphic than the "pockets."
I honestly didn’t know this and thank you for educating me on this! are there links or books that go more into detail on this?
Geee thanks vox.... I could used this video like 10 years ago when I started to make money lol, but seriously, thanks, those visuals are on point
Lol I learned this ten years ago for bookkeeping in high school......
@@notthestatusquo7683 children SHOULD know these things HELL YEAH
Were there no books or internet articles about that back then???
@@ShaunDreclin 👏👏👏👏👏
There are misformed people across the pond in the UK too. Had to correct my mum who had grown up believing that it was better being a lower tax bracket because she thought it taxed the total income over a threshold, she told my siblings this and it would have negatively hurt their careers if I had not found out.
This is an amazing video and teaches something everyone should know. I just wish they had specifically shown the difference in how much your tax would be with the wrong calculations versus the correct.
The first calculation is $18, 480
The correct calculation is $11,258
With a difference of $7222
This video should be required viewing before anyone is allowed to complain about their taxes on social media...
Very informative video. Raising the tax rates for the upper brackets doesn’t seem as bad now that I understand it more.
Assuming it will not cause offshoring of income, then indeed you may benefit from that. However, if you overtax the richest, then they will move their incomes outside of the country, and from your perspective they will be taxed way below what they were before. This is a very tricky thing, trying to find a sweet spot on the Laffer curve.
It's actually a really bad idea to tax the richest more. Just make a flat income tax rate so they can't abuse it and no one gets an unfair deal. If you want to live in the United States we need X% of your income.
Hobo Hunter Rik No it isn’t, and you can’t post a shred of proof that it is. The tax rate on the rich is lower than it was after the Great Depression and the economy is worse.
Hobo Hunter Rik No, fix the system so that no one can abuse it. Why we allow companies to offshore funds is beyond me, tell them they can either pay taxes or get out.
callowaymotorcompany don’t forget the income inequality back then too. Income inequality today is far better than it was at the end of the Great Depression. So taxing the top 1% today is a lot different that what it would have been back then.
Political comment
I agree, but I'm foreign, so don't count.
Oppositional reply!!!
Go away
People who upvote this dudes shitposts are autists
God damnit Justin. I'm at work but I'm still not safe from the ninja
My mind is BLOWN! I never knew that this was how one is to pay taxes. They MUST start teaching this in our schools.
Well now those pockets are more like 60%... (over 400k) but it Kinda defeats the purpose of wanting to become rich if you have to just give up 60%
For US viewers wanting a comparison to the United Kingdom (a 'halfway' between European high taxes e.g. Denmark which is often referred to in the US media as a paradise).
The majority of people have 2 major forms of taxation on their gross (total) salary; Income Tax and National Insurance (NI pays for our healthcare - free at the point of use).
UK Example of £52,000 (approx. $67,000)
Income Tax in the UK (for FY 19/20)
Everyone has a tax free 'pocket' of £12,500 ($16,000)
All income hereafter from £12,501 - £50,000 (All income from $16,001 to $64,300 ) is taxed at 20%
Income from £50,001 - £149,999 (All income from $64,300 to $193,000) is taxed at 40%
Any income above £150,000 ($193,000) is taxed at 45%
So;
£12,500 ($16,000) tax free
20% on £37,500 ( £7,500 / $ 9660)
40% on £2,000 (£ 800 / $1030)
So; on a salary of $67,000 USD (using UK Income Tax) you'd pay $10,690 in Income Tax.
And then after NI (National Insurance) someone earning a gross salary of £52,000 / $67,000 USD would pay an extra £5,004 / $6450 in NI for healthcare.
Overall;
You would pay $17,140 (£13,304) in income taxes/NI - an effective tax rate of 25.6% - but the major caveat is that you have all healthcare paid for.
The US has a tax free pocket as well. Even kids without a personal exemption that make around $3k end up paying no taxes, only the standard Social Security (around $200)
Good job
beautiful example. Thanks for putting in the effort :)
Those are some pretty low tax rates, I have to say. I'm not comparing it to Denmark (can't say I'm familiar with their tax rates), but here in the Netherlands, it's quite a bit higher, although we too have an equivalent of National Insurance (we call it "sociale premies") which covers most of the cost of all welfare programs, and in the lowest tax bracket, these welfare premiums amount to more than twice the actual tax. (it's roughly 10% tax, 25% welfare premiums, and thus 35% combined). In subsequent brackets, the rate of welfare premiums stays the same, and only the tax rate goes up.
EDIT: Looked at my most recent tax returns, and in the lowest brackets, the rates are 8.90% tax and 27.65% welfare premiums. Oh yes, and as for the whole tax free pocket thing, we sort of have that as well, but it's much more complex than just a single number, and depends on a whole heap of variables.
This is really great information. Thank you for the explanation. As an American, I pay $4420 in premiums out of my paycheck (this money is not taxed) just for myself. Then, if I need to go to the doctor, I would pay extra, based on my plan. So last year, I payed approximately $3,000 in other medical costs. So on an income of $34,420 (before healthcare deductions), I paid $7,420 in health costs + $1965 in taxes. That's a total of $9386, or 27.3% of my income. So for everyone who says, "Yeah, but people in the UK pay way more in taxes," that is true. However, many Americans pay more in taxes + healthcare than people in the UK.
Euhm, don't people know this already? I'm from the Netherlands, and we also have tax brackets, but I learned how to deal with it in my second year in secondary school... What do Americans learn in school?
That mitocondria is the powerhouse of the cell.
How to refuse vaccine and how to believe fake news
How Christ our Lord wrote the American Constitution with his blood, sending every homosexual to jail and establishing God's new Free and Capitalist Kingdom. Until the Evil and wicked Obama came and tried to turn the frogs Gay. -- America!
(CollegeHumor: if the other party won)
They learn the same thing Fox is not represent what Americans know and don't know this video was to purposely mislead people the youth and ignorant
The whole point is that the highest bracket is set too low. 10 million dollars is a negligible amounts to thousands of ultra high income individuals. The tax would essentially take away almost 70% of their income, which is just unfair. It’s unfair to take most of what people worked for just because you need to pay for a massive welfare system. It’s legalized mob extortion.
That’s pretty interesting. I’ve been avoiding getting promoted all this time so I don’t be put in the next tax bracket thinking I’d lose money. Now I know this is pointless.
I don’t recall learning about this in business class.... it actually makes me very infuriated.
Women studies aint the only major that does brainwashing.
So it's basically the equivalent to electrons/income filling up pockets/orbitals of an atom with specific orbital capacities/brackets!
Edit: Lmao I had no idea that this comment would receive any actual attention😂😅 Soo, just fyi, this was a very random and in the moment theory and I understand that while it maybe right, it could also be wrong😁 So, like, be kind maybe?
If you say so, but now I really want to understand the hell you're talking about. Googling "electron orbital filling" now, I guess...
Not really sub shells fill in a really bizarre way and it varies depending on the element and what is a around the atom eg ligands
Please do not remind me of high school chemistry
Yes, compare one complicated subject with another, far more complicated and unrelated subject. Makes sense.
In this analogy is the government a highly reactive element that steals electrons?
I still don’t understand. The American school system failed me
Whew so much for cracking a joke, huh?
Only if there was someone who teach the importance of child care to people. Like some kind of teach "er"
Surviner funny thing is a good majority of my knowledge came from the Internet and documentary’s (I still read good books!) yes books are important,but let’s focus on having information be spread correctly because I just of easily been turned into a dumass
You got the American self-loathing right. That's a core of the education curriculum, especially at collegiate levels.
Don't worry, in other parts of the world is a LOT worse. Venezuela, for example.
I wouldn't mind paying taxes, if the Government wasn't such a buffoon at wasting taxpayer's money. Taxes should be spent locally first, then federally. I care about the roads, bridges, tunnels, transportations, school, law & order, and community, of my local residence. I don't care about the low funding of Schools in some remote corner of the nation.
But, taxes are spent federally first, then locally, which is why most of Americans are suffering because Government is horrible at allocating resources to where they are needed the most.
People living in the local community know best where to spend the tax money, than a bunch of Politicians trying to figure out how to spend money from a building in DC.
It's not that they don't know. It's that rich places, which don't need more stuff, get priority because they're rich
I love how simple and short this video is and at the end it’s all sweet like “if your politicians are confused send them this” in a genuine attempt to be helpful.
Happy Friday! Hope everyone has a great weekend - thanks for watching our videos ✨
This is very enlightening
You all are doing a valuable public service. Keep on making the great content! Enjoy the long weekend.
Please could you make a video comparing these brackets to other nations. i bet US citizens will be surprised how low their rates are.,
GOOD WORK GUYS KEEP IT UP
Thank you for the video Vox!
Thank you. Someone is purposely not informing kids about this stuff IMO. It’s pretty straightforward so why not explain it in school? I know several ppl from different countries that had it all wrong, including me until I started working full time,
@@AnHeC I've seen you on multiple comments now and I'm so confused why you are flipping out over this. I know that I have never been taught these things in high school (I'm a senior); it's not a matter of paying attention or not. It's not my fault if we are never taught applicable knowledge. As for your comment about googling things, that is exactly what people are doing while on this video, but just receiving the information in a video instead of an article. It doesn't mean that people have no interests or are just lazy; people research things that they either need to know or are interested in. A kid who doesn't work enough to even be taxed has no need for this information, and instead will use their time to fulfill their other interests. I bet that I've researched things about flight and planes more than you, but I don't go calling you an idiot for not sharing the same interests as me.
I’m 3 years late, but it’s by design. If republicans can keep fooling low-educated voters into thinking these tax brackets affect them and not the rich, they can protect the rich and have the low-educated voters vote against their own interests. There’s a reason republicans claim schools are indoctrination grounds and there’s a reason they want to abolish public schooling.
@@AnHeC the kids who don’t care and listen can become poor. But for kids like me and many other people, having mandatory finance classes would be great so I can understand how to manage my money.
Parents: School will teach you how to make educated decisions
School: Tax brackets? Those aren't important. Now, what is the mitochondria?
If you don't find a means of multiplying your money, you will wake up one day and realize that the money you thought you had, had been exhausted. Investment is a ladder to climb the financial wall.
*_Tax Cuts for the Filthy Rich_*
@ls7orBust Absolutely not
ls7orBust def is not.
@ls7orBust
After ww2 and industrial revolution, the corporate tax was 90% and the middle class and economy was much stronger. Now a days middle class and the poor get taxed more than the top 1%. Thus corporate welfare was born thanks to Reagan and the Clintons.
@@eisernfront8549 ill take not how it works for 100 alex
Problem is the rich now have options , tax them more and their money goes away and you earn less from their taxes . Governments can no longer enslave rich people and their wealth like after WW2
Here before conservatives chime in with their "I love Vox Borders and Almanac but I hate the SJW politics stuff".
"I love Vox except when they get Too Political by being evil libtards."
*downvotes every single Vox video every time*
Love this
Lyserberg Marginal tax rates are SJW politics?
BillyGoat Anything can be “SJW politics” because “SJW’s” are imaginary
I mean that’s accurate to how we feel 😂
I knew it wasn't a flat rate cause the math never worked out that way and I always knew what a marginal tax rate was, but I didn't know EVERY bracket was a marginal tax rate.
This is taking me back to the rolling calm of the TV stand coming into classroom, turning on some Mathnet.
Well done!
Watching cos my networth is $1.
at least its a positive number
Considering most people are negative due to student loan and credit card debt that's amazing lol
At least it’s not in the negative 😂, you can literally sing with all truth... I got a dollar I gotta dollar I got a dollar hey hey hey hey
You owe 10 cents as tax
@@NavIsBalD You are not taxed based on net worth
94% of the comment section: "I learned this in utero. I explained Keynesian economic theory to my delivery doctor. Anyone who doesn't fully understand the tax code by junior high is clinically mentally disabled. My political opinion is really super valuable." 😉
lmao
The U.S. population is also about 6-8% of the world total. Hmmmmm.
actually, no, really, yall should know about that
ElyssaAnderson #gold hahaha
But it's true.
Government: you owe us your taxes
Citizen: How much?
Government: you have to figure it out.
Citizen: So you don't know how much I owe you?
Government: We know, we're just not telling you, and if you pay less you'll be charged
Not going to lie when I was younger, like fresh out of high school younger, I was thinking that same thing... like "damn if I make another few hundred that puts me into $40k bracket that will cause me to pay twice as much in taxes, I should just not make any more money because it doesn't make sense" however the difference is I got educated in some way. Unfortunately there are a lot of uneducated people. And just like the tweet, yeah take more of your money away, they're going to take half your stuff!!! .... yeah lets be sad for those people making a million dollars a year, so like what? a few thousand people out of millions?
I wish they would teach this in school.
I wish people use the wonderful freedom of information and at least... google things. Are people that passive that they know only infor that has been spoon fed to them? Maybe it's like an IQ test to see who is a mindless zombie XD
Rohit John ...no you don’t. This is a theoretical explanation. Think. If taxes are a hammer, and swinging the hammer takes a year to reach your thumb, flat on the table...Will your thumb still be there? Will you ever put your thumb back on the table?
Australia has 0% tax for $18,200 and under
👍
surfie007 australia is a shithole
@@OF01975 Australia has free health care
@ls7orBust Quite not the right word but I agree
@ls7orBust how would you run a government without taxation?
I had a coworker who complained about a raise because it put him in a higher tax bracket. That he would think that is a bad thing is pretty crazy.
I couldn’t send them this video. It doesn’t address property taxes, state taxes, local taxes, etc. For some upper middle income people, you’re already dangerously close to 50% taxed.
My mother, whom herself is experienced with quite a few quite different tax brackets across several different states, frequently tried to explain this to me in the car, but 1) I never really GOT it (all that algebra and calculus and none of this?) and 2) no one else was speaking about taxes like they worked this way! Thanks for this!
1:27
That's how to pay exact change.
So how could that politician saying 70% of your income will be taken away NOT accountable..... sad
bear in mind this was filmed 5yrs ago, the tax brackets have changed
As a first generation immigrant, thank you Vox!
I had to watch this twice because I didn't know how much each pocket could hold. I know now and I would have to say this is a very nice video and very nice infographic. Props to y'all at Vox.
How much could each pocket hold I'm still confused.
I'm confused because at first it was first 12k isn't taxed but then showed the first "pocket" 9.7k taxed at 10% ????
@@kalidilerious that deduction was a whole different pocket. Deductions are not taxed, and the leftover money that you can’t put into deductions is put into the tax brackets. So the first pocket was 9.7k taxed at 10%. Hope this makes sense lol
@@eatyourvegetables1449 ok.... so first 12k is not taxed. then the next 9.7k is taxed at 10%. right?... I hope...
I’d be good to add all the other “pockets”: social security, Medicare, state income tax, sales tax, property tax etc.
Forget algebra. This is the math we need in school!
Did Americans not learn this in school?
I'm 18, and I know this. I'm wondering how many people look up about tax deductions than arguing about something they barely have enough knowledge of?
@Vox No one argues with the fact that that's how tax brackets work. However, marginal rates are the rates that affect behaviour at the margin. A person who's marginal tax rate is already the top marginal tax rate doesn't care what his average federal liability is when deciding whether it's worth it to him or her to work an extra hour or when investing to start a new business etc. So the fact that the average federal liability on, say, a mid six-figured salary wouldn't change much under AOC's tax plan doesn't matter much to economic growth. What matters to economic growth is the fact that the take-home pay on the marginal dollar earned for a person already in the top marginal tax bracket would more than halve from ($1-$0.375)=$0.625 to ($1-$0.7)=$0.3. So, in conclusion, doubling the top marginal tax rate would hurt economic growth disproportionately by altering incentives at the margins without raising much additional revenue for the government to be spent on Democratic priorities.
This should be taught in all public high schools.
This is extremely important to know and very very common misconception.
Thanks a lot for that video. Now I finally understand how to guess where that green is going.
"Oh pockets. hmm so we gonna fill it, probably. Wait yellow pocket?? What? Oh no. annndddd you lost me"
In Honolulu, if you have an investment home, as soon as that home is over a one million dollars, the property tax rates doubles for the whole value, not a bracket. That means a $1,000,000.00 home costs $450 in taxes, but a $1,000,000.01 home costs $900 in taxes. That's an expensive penny!
*sighs* property taxes. Oh joy.
More informative than my high school finance class
Good video, I learned this stuff in an Econ class a couple years ago, but this was a good reminder of how tax brackets actually work
I cannot believe that I once had a company accountant at a mortgage company tell me that if I earn less money then I will pay less in taxes, so I should do that. UGH.
I wish you would have included the final percentage of your entire income that you paid in taxes, which is less than 22%. It's important to understand that you didn't pay 22% of your entire 84,000. I am always astonished how many people don't know this.
Wishing everyone a beautiful and successful day.
Thank you so much, you as well
SOMETHING STRANGE TV
Thank-you :)))
Why don't schools just play these educational videos instead of teaching George Washington fairy tales.
You are aware that George Washington was real right?
There's probably some teachers who play these videos. The problem is that teaching stuff like this isn't a required part of the curriculum.
@@colinyoung3685 I think he refering to myths we put on Washington like the wood teeth and cherry tree in a mocking manner.
I think is i called hyperbole.
@@colinyoung3685 I'm pretty sure he was talking about stories like the cherry tree.
George Washington's wooden teeth chopped down that cherry tree and he refused to lie, damnit!
I'm in the first pocket, really snug in their. Lol
I am married and my wife is a homemaker. I make about $100,000 a year as a plumber. We file taxes jointly. Under the 2022 federal brackets, I will pay about $13,000 in taxes (before deductions). Even though some of my income is in the 22% bracket, my what I like to call “effective tax rate” is only about 13%. And it will be even less since the standard deduction for my filing status is $25,900. Even as someone who is a little more conservative than liberal, I’m a fan of progressive tax brackets. I believe they are a pretty good compromise when considering tax burden distribution among the citizens.
wow vox is really out here teaching a whole month of australian high school economics in less than 3 minutes i’m shook
This one is middle school economics for me (from your neighbors up north)
S U P R E M E well i don’t think anyone would accuse australia of being a smart country lmao
I never knew that! Thanks for the excellent explanation.
I feel fortunate that my education didn't fail to teach me this. I don't think I'm "smarter than everyone who didn't know," just really sad about the state of our education.
What! The first example is what I really though how we were taxed. Thanks for keeping us informed, keep up the good work!
Eerily similar to the reptilian combat competition brackets... keep asking questions
Great satire, man.
518 people dislike math
The difference between knowledge and wisdom:
We are all ignorant to one extent or another. The wise person is one who maintains awareness of their ignorance.
Can't tell you how many times I've heard someone say "If I make more money it'll put me in the next tax bracket and I'll lose money." And they can't seem to understand the marginal concept
Thanks! It's a simple concept that can easily be miss understood!
This is basic knowledge
So going $1 over into the next tax bracket doesn't tax my other income at a higher rate? Why didn't anyone tell me this!?!???
Correct. Nobody told you that due to the failure of the American education system.
@@PoweDiePie Damn right about that. They never taught me anything about credit, home ownership, or taxes. What the hell? I'm 30 and this is the first time I'm hearing how the tax bracket system works.
I used to like income tax time because I used to actually get money back. But my wife and me have not filed in the last 4 years because my wife started making better money and when we did our taxes we got screwed because we had to pay in to the fed. And we could not afford it. We barely make it living paycheck-to-paycheck. We have had two cars repossessed. Some of our financial problems are because of our own mistakes. But I'm so frustrated with the system because whenever we get behind and are struggling to make ends meet and pay bills on time we still get screwed. We just tried to catch up our taxes this year and we owe the IRS so much money its ridiculous. My wife lost her good-paying job last year and so we have been struggling that much more. And it is been hard as hell to pay all the bills on my income alone because she has not secured a decent paying job yet. And the cost of living is so flipping ridiculous. I am 38 now and I will be 39 this year. I feel like there is no light at the end of the tunnel. Why can't the greedy IRS give us a break for God's sakes. We are out here struggling our asses off to have a life but the IRS doesn't give a damn. What the hell is wrong with this country nowadays!? Something needs to give. I shouldn't have to go work two or three jobs just to get ahead in life. What's the point of living if we have to work 7 Days a week and never get to do anything nice with our lives!
It's pretty scary that this video was necessary at all. Who doesn't know how tax brackets work?
It wasn't about that it was about misleading you making you think poor people pay income taxes which they do not
How is thought taxes in school?
Literally every single Millennial who wasn't taught it in school
I didn't and I just got my first W-2 (I'm 19 and in college)
Dom Thorrington
Fox News watching Americans
This was actually very informative, I learned a lot thanks!
Now explain credits and above-the-line deductions. Just a quick fact to consider: Once it is said and done most families making under $50k a year do not provide any source of federal income tax. In the US, the top 1% owns 38% of the wealth, and pays 39% of the federal taxes - more than the bottom 90%. Seems pretty fair to me.
Great information. Thank you. Please add one on the difference between tax credits and write offs. Specifically how home mortgage write offs work.
the taxes are sooooooo low in america
Cc Vroon this is straight up wrong
@@mikedean6283 super low. And I'm American born and raised. But thats what we get when we have to pay for healthcare and college.
Taxes are theft
Yeah, I can't wait to live the Venezuelan dream 😂
I've known this from the very beginning, i'm still paying too much.
which country and what % ?
Super simple to follow and understand. I've seen videos about this before, but this one is the easiest to understand. Now, I know I get it!
Everyone in comment section: bent over with their pants around their ankles looking over their shoulder. 'Makes sense, sounds fair enough for me.'