Math for Joe The Plumber. . . .

The Republican party has done a wonderful job of scaring a good portion of uninformed America into thinking that Obama's tax plan will create an impact in their pocket book. The Dems have rebutted (not hardly to the degree that in my opinion, they should), but still there exists this "fear" amongst uninformed Americans that raising taxes will affect their coin purse. So here's a little math for uninformed America on how taxes work.

1. If you don't make more than $200K, stop reading and start writing. Write a letter to Obama saying thank you for letting me keep more of my check. All of you (95% of America in fact) will reap financial benefits from the new tax plans Obama is proposing.

2. Your stated tax rate isn't what you actually pay. Taxes are tiered. So in essence, you pay a certain rate for up to this amount of money you made, and another rate for the amount of money you made after that amount . . and so on and so forth. This is the real hang up that Repubs use to scare people. If I told you I was going to raise your taxes by 5%, and I currently take 25% and you make $70K. . .doing SIMPLE math, you would say, "not voting for you, your'e trying to take an additional $3.5K of my dough!". Problem is taxes are never done this way! Here's an example!

Let's assume I make $70K. So, if I want to figure my federal income taxes for the year, you just multiply my taxable income by .25 and there you have it! Well . . . not really!

The .25 is multiplied by the amount of taxable income that I earn ABOVE $63,700. Different rates are applied to the amount I earn BELOW $63,700.

I would pay a 10% tax on the first $15,650 of our income. ($1,565)

I would pay a 15% tax on the next $48,050 of our income. ($7207.50)

I would pay a 25$ tax on the next $6,300 of our income. ($1575)

If my taxable income was $70,000, my total federal income taxes would be $10,347.50.

Our EFFECTIVE tax rate would be 14.78%. That means, even though your stated tax rate is 25%, you're only giving up 14.78% of your hard earned cash (Ask Governor Palin about this . . . they only paid an EFFECTIVE rate of about 10% last year).

But as I stated earlier, the average uninformed American has no clue about this. Coupled with the fact that the above example assumes no deductions, write offs, etc. were included. Add those bad boys in (see Palin's husband who by the time he got done had nearly $55K in deductions on his $60K salary!).

There is nothing more deplorable than a person who takes what he/she is told as truth and bases their decisions on it without giving it a second thought or the least bit of scrutinity.

Knowledge STILL is power!