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I am genuinely curious though - you seem like you've had a successful career and life. I typically assume people in your position are rather familiar with the basic math behind personal taxes, 401k's, HSA's, child tax credits, standard deductions vs. large charitable deductions, etc. I think I may have been grossly mischaracterizing a potentially large group of people and would love to hear about how you've handled your taxes since entering the workforce...and what you personally would attribute your misunderstanding of taxes to.
I think that would help me better understand and empathize with people who aren't like me.
There are a lot of things (IETC for example, or benefits, or health insurance) which have $ cutoffs. Or tax breaks (i.e. electric vehicle credit) that only apply below a certain income. Exceeding those fixed points can certainly make you make less money.
One thing I ran into recently was fiscal incentives for homeownership (though not directly related to taxes) - there is a cutoff at a certain income level where if you stay below it you get a $10K credit towards closing costs. The tax code is full of things like that (or getting your student loans forgiven if you make less than $X for Y years).
If you want to see how bad the welfare cliffs are, there are cases where a single mother is better off making $28,000 per year (and receiving all federal benefits), than making ~$70,000 per year (and qualifying for none of them).
Image of the welfare cliff effect, example in Pennsylvania:
https://qph.cf2.quoracdn.net/main-qimg-7de186ce44f6a86805609...
Would you be shocked if a CPA knows more about this than a theoretical physicist?
they're not eligible for any welfare and are above the best phaseouts
As someone who does his taxes manually every year, this probably wouldn't help. Most people would be under the threshold and just look up the value in a table and not see how it scales.
If you use any sort of tax software I expect it's even further obscured.
I agree ridicule should be used cautiously, but in a case like this where someone speaks so confidently and boldly gives advice on a topic they clearly do not understand, I think ridicule is a good way not only to inform them, but also indicate to others that it's not okay to give people this kind of advice unless you have a basic understanding of the topic.
I grew up in rural appalachia and the amount of grief than the uneducated get there for being uneducated causes them to become even more hostile and I really think that the Mr Rogers approach of education would eventually neuter any hostility they had towards the educated.
* edit: changed education to educated
Moreover, being thought about how you're wrong about X might not necessarily translate in the subject being more careful before confidently expressing themselves on a Y topic on which they don't know anything about. Hopefully, ridiculing might make the subject reconsider that part of their character.
That said, the HN policies recommend to "be kind"... I have no idea how to "ridicule someone's post in a kind way" ¯\_(ツ)_/¯
If you can't educate the poster, at least you educate other readers who also didn’t know, without the unnecessary noise of ridicule.
I see that “Calm down. It's a common misconception” did get downvoted.
(And I think your comment is better without the ridicule! The sources you found for your follow-up comment are interesting and I learned from it.)
No, they shouldn't.
0: https://carsey.unh.edu/publication/conspiracy-vs-science-sur...
1: https://www.aei.org/economics/survey-confirms-that-many-amer...
I dare say that it was probably the most common understanding until fairly recently. The internet has probably helped a lot with that. That is to say, if you're of a certain generation you probably think this way because that's what was generally understood.
I've used an accountant occasionally, but only when I had genuinely confusing tax issues involving international work or work across many states where I wasn't sure whether there existed a "nexus" that required me to pay taxes in State A or State B. Even then I did my best to double-check their work, and often caught errors/omissions. Most of my friends also do their own taxes (and have since 2006), regardless if they were line cooks or painters or engineers or MBB consultants. So I'm just not familiar with the lifestyles that lead to this.
I'd actually understand it more for people who've entered the workforce since 2005, because TurboTax/etc became much more popular. I did taxes with my dad in the mid-90's before most homes had internet, and back then it seemed far more likely that people would understand how taxes worked, because there wasn't super-easy software to do it for you.
Now I’m even more confused. Accountants were genuinely expensive and none of my peers in my economic class could afford one.
At the risk of repeating myself: how did you file taxes for the first decade of adulthood? If you were too poor pay an accountant like I was…how did you misunderstand how to calculate taxes owed for ten years, but still arrive at the correct amount to pay? Did the IRS often return money to you saying that you over-paid? Did anyone ever try to correct your misconception?
I’m trying to understand this in more detail than just “memorize the fact that 50% of Americans were lied to by (someone?) about taxes, and also just blindly accept that there is some magic unknown to me which allowed them to not be affected by that misunderstanding through most of their adult life”.
You were in poverty when you had this misunderstanding. This other commenter bought a house while they had the same misunderstanding. (So, “being poor” isn’t the experience you both had in common while holding this misconception and can’t explain it for both of you). I’m trying to understand how that misunderstanding never affected either of you. I’m trying to understand how neither of you ever had to read about how to calculate taxes owed.
Suppose your salary is X and the level that 32% starts is M
You get taxed on your first $X earnings at the lower rates. Then only the amount above the 32% mark ie X-M is taken at 32%. Thus everyone in the 32% band gets more money than those only in in the 24%.
If you are making $191,950/year (the very top end of the 24% bracket for 2024) you will pay $39,110.50 in federal income tax, (before any deductions) for a net of $152,839.50. (You may notice that this is less than 24%) If you make an additional $1,000/year: $192,950, only the additional $1,000 is taxed at the 32% rate. Which makes your total federal income tax bill $320 more, and improving your net take-home to $153,519.50
Edit to add: I'm disappointed that sibling comments to mine are so degrading. We all had to learn this at some point.
(electric vehicle credits, financial aid for university, first time homeowner credits, or affordable homeownership breaks... etc)
And to be clear we're not talking about some esoteric subject -- this is the most basic part of how your salary is taxed by the US government.
There are a lot of things (IETC for example, or benefits, or health insurance) which have $ cutoffs. Or tax breaks (i.e. electric vehicle credit) that only apply below a certain income. Exceeding those fixed points can certainly make you make less money.
One thing I ran into recently was fiscal incentives for homeownership (though not directly related to taxes) - there is a cutoff at a certain income level where if you stay below it you get a $10K credit towards closing costs. The tax code is full of things like that.