Posted in Uncategorized, tagged accountants, accounting, business, ceo, cfo, cpa, irs, mitt romney, tax, tax court, tax law, taxpayer, USA Today on January 23, 2012 |
1 Comment »
As a young CPA, I had tremendous difficulty grasping the difference between a taxpayer’s “effective” tax rate and his “marginal” tax rate. Of course, I also have tremendous difficulty grasping how Twitter works, so perhaps I’m not the best barometer for this sort of thing.
But if you find yourself similarly challenged, this piece from the USA Today may help end the confusion. The impetus for the article is the recent hubbub surrounding Republican Presidential candidate Mitt Romney’s admission that he paid a tax rate of approximately 15% on his millions of taxable income. As the author points out:
Under the United States’ progressive tax system, income is taxed at graduated rates. An individual’s tax bracket, sometimes referred to as the marginal tax rate, refers to the percentage of income that’s taxed at the top tax rate — not the rate for the entire amount. (Ed note: this marginal rate is often referred to as the tax rate imposed on the last dollar of taxable income earned.) The effective tax rate, meanwhile, is the amount a taxpayer pays in taxes as a percentage of total income.
Thus, assume Romney earned $500,000 in speaking fees and $5,000,000 in long-term capital gains from his role as a retired partner in Bain Capital. While Romney’s marginal tax rate would be 35%, as his income level reaches the highest tax bracket, the fact that the overwhelming majority of his taxable income qualifies for the preferential tax rate on capital gain means his effective tax rate would approximate 15%.
Read Full Post »
Posted in Uncategorized, tagged accountants, accounting, business, ceo, cfo, cpa, tax, tax court, tax law, taxpayer, weekend roundup on January 23, 2012 |
Leave a Comment »
A few things you may have missed while watching Lee Evans and Kyle Williams let the Super Bowl slip between their fingers.
Some key numbers to have handy during individual filing season. The most important one? It’s only 85 days until April 17th.
Despite the fact that the federal deficit is growing faster than Kobe’s divorce settlement, the IRS is cutting agents. Did you know that based on a 2,080-hour work year, cutting one senior corporate auditor would cost the U.S. $19 million in lost revenue. If I were a senior corporate auditor, I’d totally use that factoid to pick up chicks.
Obama would like to see the U.S. corporate tax rate lowered, but its reach extended. He should make sure to leave a reminder on a Post-it note for the new guy. HI-YO!
Speaking of unpopular Presidents, the Bush tax cuts apparently made the rich richer and the poor poorer. Odd. I would have thought the lower and middle classes — what with their expansive stock portfolios – would have stood to benefit the most from reduced capital gains rates.
If you’re over 70 1/2, pull yourself away from that Murder She Wrote marathon on AMC long enough to check out this article, reminding you that your ability to make a contribution from your IRA directly to a charity without generating taxable income is gone. For now.
Lastly: Wooderson + Butch Walker = Awesomeness. That’s just science.
Read Full Post »