Debt and taxes: some original infoviz creations

I was surprised to read this week that putatively educated Americans (a Louisiana lawyer, a Colorado dentist, an ABC News reporter) don’t understand the concept of marginal tax rates. Because of this lack of comprehension, per ABC, the lawyer and dentist are vowing to keep their taxable income below $250,000 to avoid President Obama’s proposed tax increase:

“I’ve put thought into how to get under $250,000,” said [the ill-informed dentist]. “It would mean working fewer days which means having fewer employees, seeing fewer patients and taking time off.”

Apparently some clarification is called for. Below is a US federal income tax table for 2009 (source).

This does not mean that if you bring in more than $372,951, every single dollar in your entire pile of money is taxed at 35%. Only Dollar #372,952 (plus whatever additional money you may earn) is taxed at that rate. Dollar #372,950 is taxed at 33%. Meanwhile, Dollar #1 is taxed at 10%. Hence the term “marginal”: In a progressive tax system, there are margins (i.e., boundary lines) at which the government increases the tax rate on any additional incoming dollar.

So I concluded a little infoviz might help clear up the misunderstanding. (Click on images to enlarge.)

This illustrates the overall tax structure. As your money piles up (green), you have to pay a greater share to the IRS (red).

At this year’s income tax rates, here are the raw numbers for people in each of the four filing statuses:

Note the colored cells in the Single table. Those numbers tell us how many dollars are subject to each tax rate. Clear as mud? Here’s a graphic depiction:

And here’s how that single person’s tax prospects compare to those of married people filing jointly, married people filing separately and heads of household:

Questions? Comments? Critiques? Please let me know what you think.

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  • Actually, upon reflection, I have one: To be more accurate, the legend on the Y axis should really read “adjusted gross income in 000’s.” But does that complicate matters by raising the question of what “adjusting” is?

  • Beautifully done! I will share this post with my readers on Monday.

    One thing I would like to see is a line graph with the x-axis being pre-tax income and the y-axis being after-tax income.

Your thoughts?