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#1
07-18-2012, 10:43 PM
 SamCook Member Join Date: Feb 2011 Posts: 2,026
Total Taxes Paid "Rich" Actuary

Everyone likes to argue about taxes and in these threads I have heard all sorts of excuses by liberals about how the wealthy don't pay their fair share.

Here is a simple calculation of a rich actuary's tax burden. In the state of New York.

Microsoft - average tax rate 23.83%, State Tax Rate 7.1%: Company Makes \$390,198 and pays employee 250,000

Corporate Taxes = 140,198
Income (after corporate taxes) - 250,000
Federal Taxes = 62,556
Social Security = 6,826 employee 6,826 employer
Medicare = 3,625 employee 3,625 employer
State Tax = 17,397
Property Tax = 8,000
Uemployment Insurance: 0.8% = 2,000

Total Taxes: 100,414 + 140,198
Total Earnings: 390,198
Remaining Savings: 149,586
Net Tax% (So Far!): 61.0%

Assume He Spends \$50,000
Sales Tax: 4% = \$2,000

100,223 Savings each year for 35 years at 8%, assume he returns 11% and inflation is 3%. Assume Dividends are 3%

Total = \$17,270,042
Pmts = 35 x 100,223 = \$3,507,792

Your Capital Gain as a percent of savings is 80%. To calculate the capital gains for 1 year...

Gain for 1 year = 17,270,042 / 35 = \$493,429 and we note our income is 20% of this number because the total gain is 80%.

Cap Gain Tax = (493,429 - 100,223) * (15% + 7% state) * (5/8) + dividends (493,429 - 100,223) * (25% + 7% state) * (3/8)

Cap Gain Tax = \$101,251

Net Income = (493,429 - 101,251) = \$392,179

Now the calculation gets a little tricky

Your Annual Tax Rate is effectively 61% all your extra earnings from now on are taxes at about 25% from capital gains and at the end of 35 years 80% of your savings are taxable.

The estate tax is 35% over 5 million dollars and your total savings was 17 million, so this works out to an effective tax rate of 35% * (12/17) = 24%

Then when you spend your money you get a 4% sales tax.

Its hard to say what "earnings" are here. You get taxed at a rate of 66% to get the money and spend it on something. When you invest the money the corporation Microsoft pays about 30% tax state and federal and you end up paying about 24% on estate taxes and 4% on sales taxes.

So net taxes on your savings is about 60% again on savings.

Inflation will eat up your savings as well. I think this example proves that ...

Tax burden income 250K per year is about 66% in new york state.
Tax burden income +700K is about 76% (because federal rate increases by about 10%)

Under 9 9 9 taxes are only 27%

The poor meanwhile get a tax refund so their taxes are negative!

Federal Tax
http://www.calcxml.com/calculators/f...-tax-estimator

State Tax
http://webinfocentral.com/RESOURCES/TaxCalculator.aspx

Microsoft Tax
http://ycharts.com/companies/MSFT/effective_tax_rate

Unemployment Insurance
http://www.labor.ny.gov/ui/employeri...creditfaq.shtm

Corporate Tax Rates
http://taxfoundation.org/article/sta...ates-2000-2012

Estate Tax
http://en.wikipedia.org/wiki/Estate_...ral_estate_tax

Last edited by SamCook; 07-18-2012 at 11:06 PM..
#2
07-18-2012, 11:03 PM
 SirVLCIV Member Join Date: Feb 2006 Posts: 41,722

2 questions:

1) Is English your first language?
2) Are you actually working as an actuary?
#3
07-18-2012, 11:10 PM
 homeys66 Member Join Date: Feb 2008 Posts: 3,108

Quote:
 Originally Posted by SirVLCIV 2 questions: 1) Is English your first language? 2) Are you actually working as an actuary?
You got anything but insults to contribute? If not, don't bother.

Btw, thanks for putting this together OP. Good to put actual numbers out there. I need to wade thru the gory details. Obviously there are common deductions people take that often really lower taxes and I assume under 9/9/9, those are history.
#4
07-19-2012, 12:33 AM
 Descalzo Member Join Date: May 2008 Location: St. George, Utah Posts: 5,576

That can all be true and 9-9-9 can still suck. Just sayin'.

I don't know if 9-9-9 is the way to go or not, but it makes me uncomfortable for 2 reasons: a) How long will it stay 9-9-9? As soon as Herman Cain is replaced, it'll turn into 27-0-0 or something. b) It dances around the real problem of too much money being spent.
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#5
07-19-2012, 01:18 AM
 Uncle Ted Member Join Date: May 2008 Posts: 6,010

#6
07-19-2012, 01:39 AM
 hotkarl Full Fledged Member Join Date: Apr 2003 Posts: 8,174

Quote:
 Originally Posted by SamCook Everyone likes to argue about taxes and in these threads I have heard all sorts of excuses by liberals about how the wealthy don't pay their fair share. Here is a simple calculation of a rich actuary's tax burden. In the state of New York. Microsoft - average tax rate 23.83%, State Tax Rate 7.1%: Company Makes \$390,198 and pays employee 250,000 Corporate Taxes = 140,198 Income (after corporate taxes) - 250,000
I stopped reading here. Corporations pay a 100% tax rate ?
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#7
07-19-2012, 06:50 AM
 SirVLCIV Member Join Date: Feb 2006 Posts: 41,722

Quote:
 Originally Posted by homeys66 You got anything but insults to contribute? If not, don't bother. Btw, thanks for putting this together OP. Good to put actual numbers out there. I need to wade thru the gory details. Obviously there are common deductions people take that often really lower taxes and I assume under 9/9/9, those are history.
It's a general response to reading his posts over a couple months. Nothing reads quite intelligibly.

I do intend to read the post later today; I even have a handy tax spreadsheet that I can run the numbers through tonight.
#8
07-19-2012, 06:55 AM
 asdfasdf Member Join Date: May 2004 Location: My perception of reality Studying for nication Posts: 20,070

Step 1 - acquire underpants

Step 3 - profit.
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#9
07-19-2012, 07:11 AM
 SamCook Member Join Date: Feb 2011 Posts: 2,026

Quote:
 Originally Posted by hotkarl I stopped reading here. Corporations pay a 100% tax rate ?
THe corporation makes 390K and pays 23% + 7% or 140K
#10
07-19-2012, 07:13 AM
 SamCook Member Join Date: Feb 2011 Posts: 2,026

Quote:
 Originally Posted by asdfasdf Step 1 - acquire underpants Step 3 - profit.
Step 2 - prove cumulative tax rate is 76%
Step 3 - profit

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