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MATH IS STILL HARD

August 21, 2008

CNN reports:

One of the negatives to earning a high salary is that your marginal tax rate is higher than other people's. While you might be earning more than your co-worker, he or she might be taking home a similar -- or higher -- amount per check because they aren't taxed as much.

Note to CNN: your "maginal" rate is the rate that applies to the next dollar of income. A 35% marginal rate means you pay 35 cents on the next dollar you earn. You can't reduce your after-tax income with an increase in your pre-tax income unless the marginal rate exceeds 100%. Yes, taxes may be too high, but they aren't that high.

The Tax Foundation explains this in some detail.

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