Average Tax Rates up to $400,000 for Single Filers: 2009

UPDATE 3/17/2010: I added more information about marginal tax rates by graphing the combined marginal tax rate line in the last graph. Also clarified that the employer-side of the payroll taxes are not included

The first of series of infographics I am designing to illustrate the average federal tax rate applied to different salaries. I want to show how the marginal income tax rates + social security and medicare taxes combine together for a single taxpayer up to $400,000. (This graphic does not include payroll taxes paid by the employer.)

A little background about this data. If you take a look at your W-2 form you can see that there are 3 different taxes applied to salaries and wages:

The income tax graph is created from the 2009 tax schedule for a single taxpayer:

which you can find from the IRS Tax Tables here while the information about the social security and medicare tax can be found here.

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Tagged as: Area Graph, Average Tax Rate, CIA, IRS, Line Graph, Tax Rates, United States, Wages

http://www.WeMatter.com Mike Liveright

1) I’d like the spreadsheet so that I could easily see the numerics.

2) I wonder if you also have the GROSS income, I suspect that the Richer are able to deduct a different percentage of their income that the Poorer. The two charts I’d like to see then are;
2.1) The Tax rate as a function of Gross (rather than Net) Income
2.2) The Percent of Gross Income that is Net income, as a function of Gross (or Net Income)

The next set of considerations is to try to figure out the effect of subsides. e.g. “Earned Tax and Child Tax credits”, Food Stamps… and perhaps others that might apply, on the Net Federal taxes, and then I have heard that the Local taxes are some what regressive,, but doubt if the figures on this are reasonably available.

BUT Thanks for the material. GOOD JOB!
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Matthew Gunn

Several issues:
(1) Social Security tax rate is 12.4%. Basic economics says that the “employer tax” is really paid by the employee. THIS IS A IMPORTANT!

(2) Medicare likewise is 2.9%, not 1.45%.

(3) To be more precise, if you “earn” $100, you really earn $107.65 because your income should include taxes paid by the employer. Tax rates on this total income would be lower. (eg. 10% tax rate on income would actually be 10/107.65 rate on total income)

(4) It is highly misleading and inaccurate imho to call Social Security regressive. Social Security is a flat tax up until an income where benefits stop accruing. Furthermore, the accrual of benefits is highly PROGRESSIVE! Low income and short career people get a GREAT deal from Social Security. Higher income people and long career people get a terrible deal. And for the super rich, Social Security is somewhat irrelevant.

I think the right way to think about it (difficult to calculate… requires assumptions) is to ask what is marginal Social Security tax rate vs. marginal increase in present value of Social Security benefits. What you’ll find is that Social Security is highly progressive until maximum taxable earnings is reached, then it becomes briefly regressive (as tax rate goes to zero), then it becomes a flat tax of zero (zero tax, zero increase in benefits).
http://www.melania.com melania

I love your charts. Thank you for posting. It’s very helpful to see this information. The light grey type however, is almost illegible on my Mac monitor.
Seth

I like Mike & Matthew’s comments. Going along with Mike’s comments and in the interest of visualizing statistics, it might be useful to overlap income quintiles to help visualize the tax rate as a function of Gross (rather than Net) Income.
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