Our financial system is crumbling this week.

[AWvsCBsteeeerike3]

Does anyone know what the median income is per person and what that person pays in taxes?

[Arthur Dent]

Does anyone know what the median income is per person and what that person pays in taxes?

Median personal income of people over 15 is ~$27,000 ($33,000 male/$21,000 female). A more useful number may be median household income which is ~$50,000.

http://www.census.gov/hhes/www/income/dinctabs.html

If I'm interpreting this correctly, the median household pays ~$3000 in federal income tax.

[sighyoung]

If not, taxpayers will be on the hook for $85 billion (with a bunch of insurance policies as "collateral"), and the Fed will be left to figure out how much more money can or should be conceivably pumped into the company to prop up these insurance policies.

Do these insurance policies provide any income after they are sold?

Also, I think it would be very helpful if these large numbers were expressed in a more meaningful way. How many people know how much $85 billion really is? For reference, $85 billion is ~$280 per person or ~$760 per household. Of course, households do not all pay the same amount, and if the loan does get repaid, we won't be on the hook for the full amount.

The problem with the insurance policies for the mortgage companies (credit default swaps) is that they were based on mortgages for which many applicants didn't have documented assets to be able to pay off the mortgage. In other words, AIG, Bear Stearns, Lehman Brothers and others insured mortgages even though they didn't have adequate proof that applicants could repay, and they didn't set aside adequate capital reserves if people defaulted. These policies were unregulated private contracts (federal regulation was barred by the Commodity Futures Modernization Act), so nobody knows how many of these policies there are, or how much the total obligations are worth.

I'm not sure how much these policies are worth on the open market, because nobody knows how many of these policies are likely to default, and most investors would be scared of them. These policies are probably worth only a fraction of their stated value.

[cpebbles]

http://www.cnn.com/2008/POLITICS/09/17/ ... index.html

I like most of his points, but here's a key one:

But even more importantly, we should not be in situations where a firm is "too big to fail." If it is that big, it should be broken up.

But that is against the tenets of free market capitalism, you say? So are government bailouts. If we're going to renege on our capitalist principles, I'd rather we did it in ways that didn't involve taxpayers paying for multi-millionaires' bad investments.

[AWvsCBsteeeerike3]

Does anyone know what the median income is per person and what that person pays in taxes?

Median personal income of people over 15 is ~$27,000 ($33,000 male/$21,000 female). A more useful number may be median household income which is ~$50,000.

http://www.census.gov/hhes/www/income/dinctabs.html

If I'm interpreting this correctly, the median household pays ~$3000 in federal income tax.

I don't hnave time to crunch all those numbers. But, I am willing to bet money that the feds get well over 6% of your income. Actually, I bet it's closer to 25% and that;s before the state gets involved.

[TheoSqua]

Does anyone know what the median income is per person and what that person pays in taxes?

Median personal income of people over 15 is ~$27,000 ($33,000 male/$21,000 female). A more useful number may be median household income which is ~$50,000.

http://www.census.gov/hhes/www/income/dinctabs.html

If I'm interpreting this correctly, the median household pays ~$3000 in federal income tax.

I don't hnave time to crunch all those numbers. But, I am willing to bet money that the feds get well over 6% of your income. Actually, I bet it's closer to 25% and that;s before the state gets involved.

The Fed also gets taxes from businesses on the same payroll you pay taxes on.

[Arthur Dent]

I don't hnave time to crunch all those numbers. But, I am willing to bet money that the feds get well over 6% of your income. Actually, I bet it's closer to 25% and that;s before the state gets involved.

That doesn't include payroll tax which is another 7.65% (not counting the employer contribution). Remember though, that your tax bracket is specified as a marginal and not total rate. So, in 2008, the first $8,025 is taxed at 10%, the next bit up to $32,550 is taxed at 15%, etc. The 25% tax bracket starts at $32,500, but for incomes in that bracket, your actual total tax rate will be much less than 25% as the first $32,500 is still taxed at ~13.8%. Also, most people can at least claim an exemption and standard deduction, which substantially reduce taxable income further reducing the effective tax rate. A while ago I put together a graph of total effective federal tax (including payroll tax) vs. income assuming the standard deduction and one exemption for single filing status and two exemptions for married filing jointly. Many people can take other deductions (child tax credit, mortgage interest, etc.). You'll see that the effective federal tax rate for a married household making $50,000 is ~16% with 8.4% of that coming from federal income tax. Mine is an ultra-simplistic model, so it wouldn't shock me if the real median household pays closer to 6%.

[TheoSqua]

If we assume everything we find on the internet is accurate, here's the government's tax income:
In Billions (percent of income)
Individual Income Taxes: $1163 (43)
Social Insurance Tax and Contributions: $870 (32)
Corporate Income Taxes: $370 (13)
Other Taxes: $165 (6)
Total: $2568 (94)

so the total yearly budget is 2.568 trillion

[AWvsCBsteeeerike3]

I don't hnave time to crunch all those numbers. But, I am willing to bet money that the feds get well over 6% of your income. Actually, I bet it's closer to 25% and that;s before the state gets involved.

That doesn't include payroll tax which is another 7.65% (not counting the employer contribution). Remember though, that your tax bracket is specified as a marginal and not total rate. So, in 2008, the first $8,025 is taxed at 10%, the next bit up to $32,550 is taxed at 15%, etc. The 25% tax bracket starts at $32,500, but for incomes in that bracket, your actual total tax rate will be much less than 25% as the first $32,500 is still taxed at ~13.8%. Also, most people can at least claim an exemption and standard deduction, which substantially reduce taxable income further reducing the effective tax rate. A while ago I put together a graph of total effective federal tax (including payroll tax) vs. income assuming the standard deduction and one exemption for single filing status and two exemptions for married filing jointly. Many people can take other deductions (child tax credit, mortgage interest, etc.). You'll see that the effective federal tax rate for a married household making $50,000 is ~16% with 8.4% of that coming from federal income tax. Mine is an ultra-simplistic model, so it wouldn't shock me if the real median household pays closer to 6%.

Thanks for the info. Very informative.

Still, I cringe seeing that chart.

[heyzeus]

The Dow is down another 449 points today.