There are many factors that play a role in the amount of taxes an individual or couple is required to pay. Before examining them, let's define "middle class." Under the definition used by the Public Broadcasting Service show "Now," middle class families earn between $25,000 and $100,000 per year.
Income is a major determinant in the amount of taxes people pay. Your tax bracket corresponds to your income level. A single person who earns $30,000 per year will be in the 15 percent tax bracket, according to the IRS.gov 2009 tax tables. A single person who earns $150,000 per year will be in the 28 percent tax bracket, according to the 2009 tax tables.
The higher your income, the higher percentage of your income you are required to pay in taxes. The IRS.gov website provides current tax bracket tables. Single people earning between $8,350 and $33,950 are in the 15 percent tax bracket; those earning between $33,950 and $82,250 are in the 25 percent tax bracket; and those earning between $82,250 and $171,550 are in the 28 percent tax bracket. Those earning between $171,550 and $372,950 are in the 33 percent tax bracket. And anyone earning more than $372,950 is in the 35 percent tax bracket, according to the IRS.
Even if everyone were to pay the same tax rate--10 percent, for example--the upper class would still pay more taxes. If your neighbor is middle class and earns $50,000 per year, she will be required to pay $5,000 in taxes. If you are upper class and earn $500,000 per year, you will be required to pay $50,000 in taxes. But since you do not pay the same rate--your neighbor is in the 25 percent tax bracket and you are in the 35 percent tax bracket if you are both single--you pay significantly more taxes than your neighbor, both as a percentage and total amount.
Filing status has an impact on tax bracket placement. The tax brackets are wider if you are married filing jointly or if you are head of household. If your neighbor from the example above earns $50,000 (as a household) but she has a spouse, she could file jointly with her spouse and be in the 15 percent tax bracket.
You can deduct expenses from your income to make it lower and potentially place you in a lower tax bracket. According to IRS.gov, business expenses, educational expenses, medical and dental expenses, interest expenses, casualty and theft losses and home mortgage points are a few examples of itemized deductions. You can also make charitable contributions and deduct those from your income.
Exemptions are deductions from your income for people you are responsible for. These people can be your children or another person that you are financially responsible for. If you make above a certain income, the deduction you receive for each exemption is decreased. According to IRS.gov, in 2009 if you were married filing separately the adjusted gross income level where the exemption amount is reduced is $125,100; if you are single, the amount is $166,800; if you are head of household, the amount is $208,500; if you are married filing jointly, the amount is $250,200.
If you are wealthy, you are almost always going to pay more taxes than if you are middle class. Congress designed tax law to give tax breaks to those who make less and more heavily tax those with higher incomes.
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