How Tax Brackets Work

Lecture re: calculating tax due from a table of tax brackets, distinguishing tax bracket percentages from fraction of tax paid. Three examples; tabular and "money stacks" illustration

Category:

Education

Tags:

• microeconomics
• economics
• tax bracket
• income tax
• brackets

[royalvisionmatrix]

Thank you for that info. I was wondering about that exact thing for my Tax's. The only question I have is what about the fixed rate at every tax bracket level. If I can lower my net to drop me down in the next bracket down, wouldn't that save me quite a bit of money?

[EconAlannah]

Go to the slide that says "How's Levi?" (about 7:15). It shows what Levi pays in each bracket. But it doesn't show what he pays in total. Let's do that now.

He has $39,000 in income. Looking at all the brackets, he pays

$0 + $250 + $1500 + $1500 + (.25x$4000) = $3250 + (.25x$4000).

I think that $3250 is what you mean by the "fixed" amount. So it's not a tax slapped on top of the rate; it's the tax table adding up the previous brackets (which you went through) for you. Is that what you mean?

[TheGomjabar]

the video is going to give me that much more context to put the current political disscorse into perspective.thanks

[jingson]

I feel more educated now! thank you!

[mttorresca]

this is great. now it seems even more reasonable to increase taxes on people who make over $250000 a year

[kolocho7777]

wonderful video. very informative, you explained it nice, slow and clear. I hope all our teachers were like you.

[LunaBella2006]

thank you for explaining what a tax bracket is.I was wondering how that worked .Really good video

[sfordgg]

if this is true than everyone i know is getting screwed