Have you ever met a person who believes that when you enter a higher income tax bracket you lose

money?

I've never met anyone in person but a lot of the dumber wingnuts do seem to be genuinely labouring under this delusion, and hostile to progressive taxation on that basis.

Like, who believe that if you earn one extra dollar and move from like, a 10% bracket to a 20% one, you have to pay 20% of your entire income. I've heard of people actually refraining from earning money to avoid being "caught" by a higher tax rate.

knowing much about how the tax laws work. They get most of their information from conservative sources and take it as that is how tax codes work, then make up stories to convince others about how taxes are unfair to those making more.

First if the Bush tax cuts expire

The 33% bracket will go to 97% no just kidding only 36%.
Likewise the 36% bracket will go to 39.6%.
Essentially a 3% tax hike but overall much less than that.

The tax hike would only affect the portion of income in THAT bracket. So take someone who has $200,000 in taxable income (after deductions, exemptions). Note this is taxable income actual income may be $20,000 to $50,000 higher.

Currently they are "in" the 33% bracket. Currently taxed owed are $51,117
However the 33% bracket starts at $171,850 so only $28,150 of their $200,00 in taxable income is subject to the 33% rate (and thus new higher rate).

If bush tax cuts expire taxed owed are now 36% (instead of 33%) on that $28,150. Net tax increase is roughly $844.50
That right $844.50 increase for someone who has a taxable income of $200,000.

So federal effective income tax would go from 25.5% of taxable income to 25.9% of taxable income. The "lose" only 1/2 of a percentage. The horrors.

"marginal" and "effective" rates of taxation.

I actually met one who complained that progressive taxation meant that he was "being punished for being successful".

with 17000 pages of tax code any change in an individual's income or method of generating income could potentially have dramatic tax consequences.

For example, can anyone here (who is not an accountant or similar as a profession) tell me what the tax consequences are of earning one dollar more than the AMT threshold?

you could replace the u.s. progressive income tax with a single flat rate and such consequences would remain.

and to be honest although i'm sure in some complex situation it could happen, for 99% of people, the more you earn the more you keep, all else being equal.

... and I submit that the tax laws are too complex for anyone to make any general statements as to what happens when income goes up by any given number.

I know for a fact that on the very high end, effective tax rates are under 15%... so I wouldn't call this tax system "progressive" at all. It's actually quite regressive when looked at from the perspective of a) total tax burden including taxes other than income, and b) the middle class paying the highest effective tax rates.

and of course that's not something you want in any tax system. i'm not an american, and I was making a general point about objections to progressive taxation. Given the talmudic complexity of the american tax code I see your point, though. So point taken, there may indeed be circumstances in which it is rational to restrain your earnings to make more money under the u.s. tax system. Which as you say isn't progressive.

The AMT was originally designed so that the richest 150-or-so families in the country couldn't tax deduct their way to zero tax obligations.

Now the rich laugh at it (they can still deduct their way to zero) and the middle class now has to compute their taxes both with and without the AMT and pay whichever is higher.

Another "tax the rich" approach epic fail. "The rich" always ends up being the middle class when it comes to paying for these initiatives, funny how that happens. All the more reason why replacing the ruling plutocracy needs to be our first order of business!

More that an excessively complex tax system will always be more regressive than intended in practice, and possibly that effectively taxing the rich requires tax simplification on a large scale.

The "problem" is that AMT isn't adjusted for inflation.

It could be solved forever by simply passing legislation to index all components of it to inflation.

Even better it could be indexed to an annualized distribution of income so that that the threshold was placed at 95% percentile of household incomes.

Congress has INTENTIONALLY never solved it. It could have been solved permanently forever any year in the past (and could also be solved this year or next year).

They hold it out and make a 1 year "fix" because it is a huge barganing chip. Usually a couple thousand earmarks and amendments get attached to the "AMT fix" bill.

I've met many people who believe that when they work extra hours and get overtime, they will end up with less money.

shit i will trade with glenn beck any day of the week

their complaint is always based around working a bunch of overtime in a pay period, which in some cases may trigger the employer to increase withholding to a level that would be appropriate for a higher tax bracket if that person were consistently earning that much. so their check may be a tiny bit smaller, but they'll get it when tax time comes around, but they'll never wrap their tiny heads around that fact. they blame the government when they should be blaming the person who does their companies payroll, or even their own choice in withholding.

Overtime in a given week, and the way withholding is calculated result in less-than-expected take home pay. Withholding will be calculated as if the person earns the amount every week.

They get it back at income tax time, usually, but the labor-reward connection is blurred by that time.

I think of them all as stupid fucks myself.