Awesome, thank you. Ill definitely watch more of your videos on economics, but i am curious if you have ever considered doing videos regarding financial investments? if you do invest on your on time you should consider doing some videos! i think they would do very well.
in the real world, usually yes (it depends on what the question is -- "income tax" versus "total tax"). In theoretical econ problems, usually no because they simplify the world to not include these things as options. Hope that helps!
This is still too simplified because what you really should be explaining is that the salary for your job is not your taxable income the salary for your job is actually much higher than your taxable income
cool video, but lets say for example i made 60.000 dollars, then i would loose money because i would come out with only 36k which is only 0.5 times a higher pay compared to the 2x hours i did
Thanks for your comment! Yes, that is correct -- you would have a "decreasing return" for earning more money. However, you would still take home more money by working more hours (although as you said, those extra "hours" you get a lower pay, but not negative). There is a common misconception that you physically take home less money if you barely go into the next bracket. For example if the tax rate jumps from 10% to 20% at $60,000, then people think that making $59,000 means you "keep" 90% = $53,100, but that if you work more and make $60,000, you then only keep 80% = $48,000, which means you would actually take home less money even though you worked more. That's what this video addressed -- that this isn't the case since the 20% is just for that extra amount, not for the entire 60, so you still "take home" more total for 60k than 59k (but, as you said, not "a lot" more).
So you're doing more than calculation. I.e multiply the first amount by the amount it's taxed in that bracket, then add on the tax for each increase in income. How the fuck am I supposed to learn this reading out of the book?
You said that if I make $30.000 I should pay 20% of $30.000 in taxes so I should make 80% of $30.000=$24.000. But if $30.000 falls in the first bracket as well, then I should pay 10% of the first $10.000 and 20% of $20.000 so it would be $1.000 + $4.000 = $5000 in taxes in total, so I would be left with $25.000 not $24.000. What am I getting wrong?
Great video, really cleared a question up for me. But -- you said a person paid 30,001 would pay 30% on 1000 when they actually pay 30% on just 1. Ie If they were paid 31,000, then they would be paying 30% of 1000. Not to be nitpicky, it just tripped me up at first . Cheers!
Thank you! After looking at numerous videos, this one made the most sense.
Glad it helped! :)
This really helped with my question thank you so much maybe i will pass the test now will be watching more of your videos
Thanks for the kind words! Good luck on your test! :)
Thank you so much!! It really helped me understand this concept. Amazing video.
average tax rate= total $ taxed/ total $ income
thank you.
This made so much more sense than my stupid book. This is why its important to be taught finance rather than trying to learn it on your own.
Thanks for the kind words! Glad it was helpful!
great video, does the same system apply in Canada?
Thank you! Yes it does
Awesome, thank you. Ill definitely watch more of your videos on economics, but i am curious if you have ever considered doing videos regarding financial investments? if you do invest on your on time you should consider doing some videos! i think they would do very well.
when calculating average tax rate do I include FICA and tax credits?
in the real world, usually yes (it depends on what the question is -- "income tax" versus "total tax"). In theoretical econ problems, usually no because they simplify the world to not include these things as options. Hope that helps!
Good video
thank you!
This is still too simplified because what you really should be explaining is that the salary for your job is not your taxable income the salary for your job is actually much higher than your taxable income
cool video, but lets say for example i made 60.000 dollars, then i would loose money because i would come out with only 36k which is only 0.5 times a higher pay compared to the 2x hours i did
Thanks for your comment! Yes, that is correct -- you would have a "decreasing return" for earning more money. However, you would still take home more money by working more hours (although as you said, those extra "hours" you get a lower pay, but not negative). There is a common misconception that you physically take home less money if you barely go into the next bracket. For example if the tax rate jumps from 10% to 20% at $60,000, then people think that making $59,000 means you "keep" 90% = $53,100, but that if you work more and make $60,000, you then only keep 80% = $48,000, which means you would actually take home less money even though you worked more. That's what this video addressed -- that this isn't the case since the 20% is just for that extra amount, not for the entire 60, so you still "take home" more total for 60k than 59k (but, as you said, not "a lot" more).
So you're doing more than calculation.
I.e multiply the first amount by the amount it's taxed in that bracket, then add on the tax for each increase in income.
How the fuck am I supposed to learn this reading out of the book?
You said that if I make $30.000 I should pay 20% of $30.000 in taxes so I should make 80% of $30.000=$24.000. But if $30.000 falls in the first bracket as well, then I should pay 10% of the first $10.000 and 20% of $20.000 so it would be $1.000 + $4.000 = $5000 in taxes in total, so I would be left with $25.000 not $24.000. What am I getting wrong?
Great point, I see that too
Great video, really cleared a question up for me. But -- you said a person paid 30,001 would pay 30% on 1000 when they actually pay 30% on just 1. Ie If they were paid 31,000, then they would be paying 30% of 1000. Not to be nitpicky, it just tripped me up at first . Cheers!
definition of nitpicky mate.