Uh No

Atrios posts "Uh No," in response to an article wherein Jamie Diamond, the CEO of JP Morgan Chase claims that most bankers like him pay over 50% in income tax. Atrios correctly points out several errors that AP failed to even mention in this calculation, but even Atrios missed the point. Diamond argues that rich bankers pay 39.6% in Federal Taxes and 12% in New York State and City taxes, totaling over 50%. Uh, no. As Atrios notes, the top Federal rate is 35%. However, that's the top marginal rate. As Atrios fails to mention, the first tiers of income are a) not taxed at all and later tiers are taxed at lesser rates. That, together with exemptions and deductions means that a wage earner with $1 million of wage income would probably only be taxed at about 27% on average at the Federal level. Further, the New York State and City taxes are deductible from the Federal taxable income, so the actual combined rate would be less than 40%, not over 50%. Moreover, a person with income in this range would almost certainly have significant (perhaps all, as, for example, hedge fund managers) of his/her income coming in the form of interest, dividends and capital gains, all of which are taxed at a maximum rate of 15% at the Federal level and even that has a $60,000+ exemption for married filers ($30,000+ for singles). So most of these folks are not paying anything close to 50% in taxes.