How tax brackets actually work

There is a common misunderstanding about how tax brackets work in the US, and it’s causing us to have uninformed debates about taxes.

The TEx crew took a deep dive into Representative Alexandria Ocasio-Cortez's proposal for a marginal tax rate of 70% for top earners in America. A lot of people are upset, and even more have no idea how it works.

When Rep. Alexandria Ocasio-Cortez proposed a 70 percent top income tax rate, many conservatives started saying Democrats wants to take away 70 percent of Americans’ hard-earned money. This is not only wrong, but it takes advantage of something Americans have long misunderstood: tax brackets. It’s time to fix that with a simple, paper-made video.

[WAYAWAYWithAsh]

This is legit the first time I understood tax brackets... I also never assumed I knew how they worked, simply that I had no idea how they worked.

[AbbreviatedReviews]

This is one of those things everyone should know, but isn't taught in school for some reason.

[jwc]

This "Tax Bracket" system is how 99% of the developed coutries use. Yet, too many people don't understand this basic concept.
We need to teach this kinda stuff in Elementary School Math class.

[Wrest]

I had zero idea this is how taxes worked.

[coolbrotherf]

Waaiit, you're saying that people debate about things that they don't understand at all? I'm pretty sure that never happens.

[ObjSolid]

Taxpayer: "Nice tax bracket system!"
Lady liberty: "Thanks! It has pockets"

[lakeedwarddaily]

Explaining that didn't seem very taxing at all.

[mandeepsivia]

You should probably also include that this is earned income tax and is not the same as capital gains tax or corporate tax. Some people dont seem to understand that either.

[clark]

The number of people who insist that they got pushed into the next tax bracket and actually lost money from a raise/bonus somehow is astonishing. And they always insist they're right about how taxes work.

[voscra]

Just to show you all the math clearly.

The person who makes 84, 000 USD
Pays 11, 258 USD

So 13.4% of his income is his effective tax rate.

If he was paying 22% of his income he would have to pay 18, 480 USD

[FredMason]

I taught this to my students today in class. I'm a high school Algebra teacher.

[evaristegalois]

What we learned from this video:

*Tax brackets are actually tax pockets*

[jessicaferry]

I'm 16 and just looking at getting my first job, and this video actually really helped me understand more about taxes. I was really confused and I didn't understand tax brackets, but now I do. Thank you so much!! 😊

[BootyWarrior]

I honestly didn’t know this and thank you for educating me on this! are there links or books that go more into detail on this?

[shiveshpoddar]

When your animation maker went on a holdiay

[MultiCombo]

You tell me that grown adults don't understand tax brackets?

[ashleyjenny]

If you don't find a means of multiplying your money, you will wake up one day and realize that the money you thought you had, had been exhausted. Investment is a ladder to climb the financial wall.

[sunnythegreat]

I wouldn't mind paying taxes, if the Government wasn't such a buffoon at wasting taxpayer's money. Taxes should be spent locally first, then federally. I care about the roads, bridges, tunnels, transportations, school, law & order, and community, of my local residence. I don't care about the low funding of Schools in some remote corner of the nation.
But, taxes are spent federally first, then locally, which is why most of Americans are suffering because Government is horrible at allocating resources to where they are needed the most.
People living in the local community know best where to spend the tax money, than a bunch of Politicians trying to figure out how to spend money from a building in DC.

[carbonarcade]

In the debate around AOC's 70% top tax rate you hear loads of people not understanding this concept, even on the news, which confuses me as a British person. the way tax brackets work is common knowledge in the uk and we get taught about it in school

[DeffecX]

Mind blown. Years of confusion gone in a couple minutes. 😅