The first paragraph of that Wikipedia page: "Personal income is an individual's total earnings from wages, investment interest, and other sources. The Bureau of Labor Statistics reported a median weekly personal income of $1,037 for full-time workers in Q1 2022. For the year 2020, the U.S. Census Bureau estimates that the median annual earnings for all workers (aged 15 and over) was $41,535; and more specifically estimates that median annual earnings for those who worked full-time, year round, was $56,287."
That graph seems to be just incorrect. All three of the links it's supposedly sourced from don't have it on their pages. There is a remark of "own work," so I think a Wikipedian assembled it themself. Given that it frankly contradicts the article it's in, I would assume that it's in error.
The graph would be consistent with the part you quoted if the median earners were paying 33.5% tax: 41535 - (41535 * 0.335) is roughly the 27598 figure it shows for 2020. The figure only shows state and federal income tax, which adds up to 13% tax; I don't know enough about the US to now if there are other taxes which would add up to 33.5%.
I ignored the payroll tax, because I assumed that's not counted as part of the employee's gross income?
And I agree that neither income tax nor income + payroll tax adds up to the 33.5%. I don't know if there are more taxes which need to be considered. 13% total tax seems low.
> I ignored the payroll tax, because I assumed that's not counted as part of the employee's gross income
Employee share of payroll tax is, employer share (which is shown reaching down from the bottom) is not.
> 13% total tax seems low.
Given what I've actually paid with a far above median income, 13% soubds reasonable. Its low as a nominal rate, but there are lots of credits and deductions available, and the before-tax median personal income is well below the cutoff for EITC, which can be a huge one. Heck, a large minority of the population pays zero or negative net income tax.
> In any case, their point still stands with the $29k figure.
Comparing comp for two people who are working really hard, doesn't really work when you're comparing to a median income that includes lots of people who don't work or don't really work.
Similarly, comparing median net income (which includes taxation) with a pre-tax windfall doesn't really make sense, either.
Further, we're not adjusting for time value of money...
And for every one making under 30k per year there is one making over 80k per year.
And, very interestingly and more nuanced, you can take into account how a person changes over time. For example, while I was a grad student, I worked full time and definitely fell under the poverty line. But would you really consider me a poor/destitute person?
About 60% of Americans break into the top 20% of household income at some point in their lives(>$110k/yr). In the same vein, almost 20% of Americans will earn less than the poverty rate at some point in their lives ($24k/yr).
Like I said, I think Americans have many problems, but if there is one thing we are good at it is income (and the consumption that comes with it).
The top federal income tax bracket is 37% and the top California tax bracket is 12.2%. This is for income exceeding 500k. So disregarding local taxes and property taxes, in California most of this income would be taxed at 49.2%.
This is a subthread about the median income that we would compare the $7M payout to, not the $7M payout itself. It certainly falsifies the graph paulluuk linked to, and using high CA taxes on the Bay 12 payout only further undermines paulluuk's comparison.
Apologies for the lack of clarity, I was addressing just this sentence in the parent
> That would require greater than 50% taxation, which isn’t realistic at all in the United States.
My point is that higher than 50% total taxation on a large single-year income (considering local and corporate taxes) is entirely possible in the United States, though it may be less in some states than other. I’m not saying that the estimate is correct as the Tarn Brothers don’t live in California. But if they took the income to a corporation, paid corporate income tax, and then took the whole income or a large part of it as dividends in a high tax state, then >50% is quite possible. On a pass-through entity, close to 50% is the standard and unavoidable in high tax states.
Federal taxes are marginal. You don't pay 37% on the full 500k, you pay 37% on anything below that bracket start point, you pay the lower rates. For instance, if you're single and declare $1M in income your effective tax rate is more like 33.5% and not 37%.
Real, adjusted, individual including non working and part-time population above 15yo: $38k/yr
Including only full-time workers: $57k
Median household income: $71k
The US has enough problems, no need to make up much smaller income numbers than the reality.
https://fred.stlouisfed.org/