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View Diary: Private enterprise shackled by Obamunism, aka Dow hits 15,000 for first time (153 comments)

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  •  it's about going down a bracket (0+ / 0-)

    it's not 1 to 1 as you think.

    -You want to change the system, run for office.

    by Deep Texan on Fri May 03, 2013 at 08:55:46 AM PDT

    [ Parent ]

    •  Sorry, going down a bracket (3+ / 0-)
      Recommended by:
      Mr MadAsHell, VA Breeze, bryduck

      doesn't do anything for the income that's already under that bracket.

      You save the marginal rate on every dollar saved, and no more.

      If I'm $10 over the 25% bracket, and I save $20, my tax savings is $4 (25% on the $10 over the bracket, and 15% on the $10 under the bracket).

      So putting $20 into the IRA saves you $4 in taxes.  There's no example you can come up with where the tax savings make up for the foregone income.

      •  of course there is (0+ / 0-)

        say i made 40K.  i could put about 1200 in retirement account lowering me to the 15% bracket because my taxable income was now under 35K.

        my take home pay is actually about the same.

        -You want to change the system, run for office.

        by Deep Texan on Fri May 03, 2013 at 09:24:09 AM PDT

        [ Parent ]

        •  You don't understand marginal tax rates (1+ / 0-)
          Recommended by:
          bryduck

          You seem to think that your entire $40k in income is taxed at 25%, and then if you save enough to get your income below $35k, it's all taxed at 15%.

          That's not how it works.

          •  that's not what i said either (0+ / 0-)

            i know how marginal tax rates work.  what i am saying is there is a sweet spot between retirement account contributions, taxable income and your take home pay.

            it exists for most people but it may not seem like much.

            over time though, that retirement account will grow and is much better than no retirement account.

            -You want to change the system, run for office.

            by Deep Texan on Fri May 03, 2013 at 09:44:05 AM PDT

            [ Parent ]

      •  depending on my deductions for the year (0+ / 0-)

        i can actually get a bigger paycheck by tweaking my retirement accounts.

        having them is very good.  

        not having them is just insane in my opinion.

        people can afford them.

        -You want to change the system, run for office.

        by Deep Texan on Fri May 03, 2013 at 09:26:39 AM PDT

        [ Parent ]

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