AAEC 2104 Lecture Notes - Lecture 8: Tax Rate, Progressive Tax, Gross Income

• School: Virginia Tech
• Department: Agricultural and Applied Economics
• Course: AAEC 2104
• Professor: Alex White

Document Summary

Police/fire protection: welfare, farm programs, special interest. Your goal should be to maximize your after-tax income. Us uses a progressive tax system: your tax rate (%) increases as your income increases, high income households pay a higher percentage. Everyone starts out paying the same rate: bill gates pays the same rate as you on the first portion of his income. Marginal tax rate = the taxes owed on the next dollar you earn. Average tax rate = total taxes/taxable income. Gross income minus: federal income taxes withheld, sttate income taxes withheld, fica (social security and medicare) 7. 65% Filling out a w-4 form: the more exemptions you list, the less income tax they withhold, fill out when you start a job, can make changes later.