2.2 Income Taxes

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2.2 Income Taxes


Pages:
16
School:
University of Texas at Austin
Course:
Fin 320f - Foundations of Finance
Foundations of Finance Documents

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Unquestionably, there is progress: the average American now pays out twice as much in taxes as he formerly got in wages. H. L. Mencken US journalist, essayist and editor (1880 – 1956) Foundations of Finance 2.2 Income Taxes From To Rate $0 $17,400 10% $17,400 $70,700 15% $70,700 $142,700 25% $142,700 $217,450 28% $217,450 $ 388,350 33% $388,350 $infinity 35% 2011 - 2023© H Toprac 3 2012 Individual Income Tax Rates (Married Filing Jointly)  Standard Deduction: $11,900  Personal Exemption $3,800  Notice that the rates progress (get larger) as taxable income gets larger  In other words, the US has a progressive tax system  Regressive taxation applies higher rates to lower incomes 2011 - 2023© H Toprac 4 Progressive vs regressive taxation  All taxpayers get to deduct certain expenses from their taxable income  Companies deduct all of their business- related expenses  Individuals can deduct either an itemized list of living expenses, or the “standard deduction” determined by Congress 2011 - 2023© H Toprac 5 Deductions and exemptions



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