A great deal of political discussion has focused on what taxes the wealthy and poor pay, and often the focus is ONLY on the Federal Income tax. It is important to recognize that that there are many other taxes, and none are as progressive as the Federal income tax, and hence fall on low to middle income people. Below is a table I generated using federal income tax rates for 2012 and 2013, to which I have added the Social Security (both individual and employer share), Medicare taxes and the state income tax for Mass (which is essentially a fixed proportional after deductions). I did not try to include the alternative minimum tax, which has a 26% marginal rate after a high deductible.
The bottom line is that in 2012 middle income households with taxable earned incomes of $70,700 to $142,700 pay higher marginal tax rates than the highest income earners, largely because the Social Security tax disappears above about $110,000. If the Bush tax cuts revert to their 2002 levels, then both the Capital gains tax will increase and the marginal rate for the highest income group will exceed that of the middle income levels.
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| Marginal Tax Rates 2012 and 2013 for married, filing jointly, all earned income is from an employer |
| Tax rates for 2013 assume taxes revert to their 2002 levels, but tax intervals remain as they are in 2012 |
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Federal tax rates |
Social Security tax* |
Medicare tax |
Mass. income tax |
totals, marginal income taxes rates in Massachusetts |
| Taxable income ranges for 2012, after deductions |
2003-2012 |
2002 and 2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
2013 |
| $0 to $17,400 |
10% |
15% |
10.2% |
12.2% |
2.9% |
2.9% |
5.25% |
5.25% |
28.35% |
35.35% |
| $17,400 to $70,700 |
15% |
15% |
10.2% |
12.2% |
2.9% |
2.9% |
5.25% |
5.25% |
33.35% |
35.35% |
| $70,700 to $142,700 |
25% |
28% |
10.2% |
12.2% |
2.9% |
2.9% |
5.25% |
5.25% |
43.35% |
48.35% |
| $142,700 to $217,450 |
28% |
31% |
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2.9% |
2.9% |
5.25% |
5.25% |
36.15% |
39.15% |
| $217,450 to $388,350 |
33% |
36% |
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2.9% |
3.8% |
5.25% |
5.25% |
41.15% |
45.05% |
| $388,350 and up |
35% |
39.6% |
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2.9% |
3.8% |
5.25% |
5.25% |
43.15% |
48.65% |
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| $250,000 of Schedule C income |
35% |
39.6% |
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5.25% |
5.25% |
40.25% |
45% |
| Alternative minimum tax after ded. |
26% |
26% |
10.2% |
12.2% |
2.9% |
2.9% |
5.25% |
5.25% |
44.35% |
46.35% |
| Long term capital gains tax |
15% |
20% |
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5.25% |
5.25% |
20.25% |
25% |
| * The maximum used for the social security tax is $110,000 in 2012: tax rates shown are for bottom range in bracket |
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| Sources: |
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| http://taxes.about.com/od/Federal-Income-Taxes/qt/Tax-Rates-For-The-2012-Tax-Year.htm |
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| http://www.ssa.gov/oact/COLA/cbb.html#Series |
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| http://www.ssa.gov/oact/progdata/taxRates.html |
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| http://www.mass.gov/dor/docs/dor/forms/inctax12/f1-nrpypdfs/form-1.pdf |
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| http://www.mass.gov/dor/docs/dor/forms/inctax12/f1-nrpypdfs/sch-d.pdf |
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