Let’s talk for a moment about an imaginary worker who makes, oh, let’s say… $50,000.
Let’s further stipulate that said worker lands, for various reasons, in the 25% tax bracket.
So, you’d presume that of the $50,000 our worker earns, $12,500 is paid to the federal government as income tax. Right? Because that’s 25% of $50,000, so… we end up with $37,500 that actually goes towards social security, state taxes, food, gas, savings, etc. The other stuff. Right?
No. Wrong. Here’s why.