I’m so tired of y’all spreading misinformation on taxes. So here we go. Ima make up some numbers because I don’t know the actual tax brackets off the top of my head and I like to use round numbers for easy math. This is how taxes REALLY work...

So let’s say the tax brackets are set up like this:
$0-10k = no taxes
$10-20k = 10% taxes
$20-50k = 20% taxes
$50-80k = 30% taxes
$80-120k = 40% taxes

Let’s say you make $100k because once again I like round numbers. You expect to pay $40k in taxes, right? Wrong!

Your money is actually taxed in brackets. So the first $10k is untaxed. That doesn’t mean if you make up to $10k then you don’t pay taxes. It means no matter how much you make, your first $10k is untaxed. The rest of your money is taxed according to the bracket it was earned in.

First $10k is untaxed. Your next $10k (up to 20) is taxed at 10%. That’s $1k in taxes paid for your first $20k earned. Your next $30k is taxed at 20%. That’s $6k in taxes paid for your first $50k earned. Taxes aren’t linear and they escalate as your income does

The next $30k ($50-80k income) are taxed at 30%. That’s another $9k you pay in taxes. The last bracket you enter is 40% for up to $120k earned but you only make $100k so only $20k of your money is taxed at 40%. So you pay $8k in this bracket (you paid $9k in the last)

Last bit of math. Stay with me. You paid $0 in the first bracket, $1k in the next, $6k in the next, $9k in the next, and $8k in your final bracket. That’s a total of $24k paid in taxes for the $100k you earned that year. Even tho the tax rate in your bracket is 40%

In summary, you aren’t taxed by how much money you made. You are taxed by how much of the money you made fell into each tax bracket. That’s how in my example you would pay $24k in taxes on $100k income instead of the $40k you’d expect to pay based on the bracket you end in.

Last thing. This is a great example of how rich people pay way more in taxes than regular people (as they should). If you made $50k your taxes would’ve stopped at $7k. But if you double your income to $100k your taxes go way up to $24k.

Tax brackets stop at like $400k I think so anything after that is taxed the same, but you can imagine how much more someone making $350k is paying in taxes than someone maki $$35k. That’s how the system is intended to work. Rich people don’t actually pay taxes tho.

Ok ima just keep adding as it comes to me so it can be as easy as possible to understand. If you made $10k, would pay $0 in taxes. $50k income, 7k in taxes. $100k income, $24k in taxes. $120k income, $32k in taxes. Your taxes spike up even though your income increases linearly.

1/3 Question from my DM. Celebrities and rich people pay taxes differently from regular people so ima just answer for normal folks. Your job takes payroll taxes out of your check based on how much money they think you’re gonna make in total that year

2/3 so they look at your paycheck and spread that out over the whole year. Let’s say they project you to make $80k. They’re gonna take the taxes out of your check every 2 weeks so that at the end of the year you have paid the exact amount of taxes as you should @ $80k income

3/3 but let’s say you end up making $100k that year. So you only paid taxes as if you made $80k. The government is not giving you that extra $20k tax free and when you file your taxes you’re gonna owe them money. That’s how normal people end up owing back taxes.

Another thing. Apple pays $0 in taxes. They make billions of dollars every year and they don’t pay a single dollar in taxes. You should be outraged because you bring your ass to work every day and they take a third of your check. This is how Apple, Amazon, etc get away with it

First thing: companies are taxed by PROFIT and not REVENUE. So if a company makes $1 mil and had $500k in expenses, then they only pay taxes on the $500k profit they made. Second thing: US companies pay US taxes, French companies pay French taxes, etc

Third thing: licensing is when you pay someone in order to use their logo, brand, image, whatever. Like if you own a McDonald’s you have to pay the corporation however much money per year to use their name. We are almost there so stick with me.

So what these mega corporations do is start another company in a country with no taxes. Like the Bahamas. The Bahamas Apple will own the actual Apple licensing. So the US Apple company has to pay the Bahamas Apple, even tho they’re owned by the same people

So at the end of the year, however much profit US Apple was going to make, they instead pay that amount to Bahamas Apple in a licensing fee. Now they have zero profit. No taxes. That’s how you make billions of dollars every year and don’t pay a cent in taxes.

Amazon, Walmart, and whoever else all do this too. So the next time the government takes half your check just remember they wouldn’t need to take ANYTHING from you if they made these mega corporations pay what they should be paying in the first place.