Re-introducing progressive tax rates would be a small start;
Though, allegedly, a majority of Americans don't comprehend progressive tax rates.
Many state income taxes reach the top income tax rate before the federal poverty rate (ie < $12k).
The federal tax rates are poorly graduated; the first, 10% rate, cuts at $11,600 over to 12%; and then we jump 10% to 22%, only for the next bracket to have only 2% bracket gap again. Imagine if the first bracket was 0% and went all of the way to welfare levels - approximately $30k, the US could effectively eliminate the additional complication of the Standard Deduction (also a paint point of illegal filing and fraud). Imagine if every bracket was easily defined at ~10% - that could make predicting and filing easier. This is addition to payroll taxes being flat and regressive - when they could be built into the income tax.
2024 tax brackets
Tax rate Single filers Married couples filing jointly Married couples filing separately Head of household
10% $11,600 or less $23,200 or less $11,600 or less $16,550 or less
12% $11,601 to $47,150 $23,201 to $94,300 $11,601 to $47,150 $16,551 to $63,100
22% $47,151 to $100,525 $94,301 to $201,050 $47,151 to $100,525 $63,101 to $100,500
24% $100,526 to $191,950 $201,051 to $383,900 $100,526 to $191,150 $100,501 to $191,150
32% $191,951 to $243,725 $383,901 to $487,450 $191,151 to $243,725 $191,151 to $243,700
35% $243,726 to $609,350 $487,451 to $731,200 $243,276 to $365,600 $243,701 to $609,350
37% $609,351 or more $731,201 or more $365,601 or more $609,351 or more
I'm confused. These look progressive to me. Can you explain?
Yes - first - this is progressive - but, not efficient in the context of Median income being $40k, poverty being $12k, and most welfare programs having a cutoff at ~$30k.
The 10% bracket is all under poverty level (the reasons this exists is somewhere between occasional part time work for seniors or teenagers, the standard deduction)
The 12% bracket includes ~50% of individual filers that are under most welfare levels. Does that 20% increase in tax rate make sense for that group? The Married/household rate covers the majority of American households, including median household income.
The 22% bracket... let's start with this is a 47% graduation increase versus the previous 20% increase (more than double)
The 24% bracket... again, a seemingly random increase of < 10% rate graduation increase
The 32% bracket... an 8 point rate increase, that's 25%...
The 35% bracket, back to a 3 point, 10% increase
the 37% bracket, even more decreasing, a 2 point, 6% increase
So; the rates of graduation increase are 10%, 47%, 10% , 25%, 10%, 6%; from a distance we can see that the 47% and 25% changes are definitely outliers; If, the top rates of change were at least at the top marginal incomes, it would make more sense.
It looks even worse if you also include the regressive 6.2% OASDI payroll tax. 16%, 18%, 28%, 30%, 38%, and 41% -- 25%, 55%, 11%, 26%, 8% (ignoring the employer's OASDI / Social Security)
Nc Income tax rates
4.5%
SC Income Tax Rates
$0-$3200, 3%
> $3200, 6.5%
Al Income tax rates
$0-$500 2%
$500-$2500 4%
> $2500 5%
I believe those are just the federal tax rates. In the US you pay both federal and state taxes, so it depends a lot on which state you live in.
Their taxes probably are lower than yours, but probably not by as much as you think, and certain things like medical insurance are really expensive in the US.
Who cares about marginal tax rates -- that is the rate you pay on your last one Euro of income. What really matters is effective (blended) rate.
In the US, there are normally two levels of income tax (Federal and State), and, rarely, there is also a local/city income tax (like New York City). Sorry, I am not familiar with the Irish income tax system. Since you mentioned that you are in the 24% bucket, your gross income is more than 100K USD. (Congrats: That is pretty high in Ireland where the median income is about 38K EUR.) If you add up all income taxes in the US (Federal + State + Payroll), I guess it is pretty close to your 35% effective rate in Ireland. So really, not so different.
Though, allegedly, a majority of Americans don't comprehend progressive tax rates.
Many state income taxes reach the top income tax rate before the federal poverty rate (ie < $12k).
The federal tax rates are poorly graduated; the first, 10% rate, cuts at $11,600 over to 12%; and then we jump 10% to 22%, only for the next bracket to have only 2% bracket gap again. Imagine if the first bracket was 0% and went all of the way to welfare levels - approximately $30k, the US could effectively eliminate the additional complication of the Standard Deduction (also a paint point of illegal filing and fraud). Imagine if every bracket was easily defined at ~10% - that could make predicting and filing easier. This is addition to payroll taxes being flat and regressive - when they could be built into the income tax.