Actually that is not quite true. The different tax RATES apply to different levels of income. I'm not sure of the dividing points but one is taxed at the 10% rate on say the first $20,000 then 15% on the next say $35,000, One top rate does not go back to the first dollar once you fall into a higher.
>
>>>>> >>>
>>>>Ok. Show me one person in the 15% tax bracket that pays 15%. Just >>>>one.
>>>
>>> By definition, everyone in the 15% bracket pays a marginal rate of >>> 15%.
>>
>>No, they do not. They pay 15% of their adjusted income.
>
> You are not being very clear here. If you mean that someone in the
> 15% tax bracket pays 15% of their Adjusted Gross Income in taxes, you
> are just plain wrong. If you mean that adjustments to income affect
> your effective marginal rate you are essentially wrong there as well.
> Adjusted Gross Income reflects losses (such as writing off a debt owed
> to you), certain taxes paid (half the self employment tax) or costs
> paid (e.g. tuition, health insurance premiums for self employed) or
> credits given the taxpayer by the government (e.g hybrid car credit).
> Also IRA contributions up to a limit. As far as I can see, these
> adjustments are not affected by income. In other words, if you earn
> another dollar, your AGI will go up by $1. The same is generally true
> of deductions. 401K contribution deduction limits may increase
> proportionally with income (not sue of that) and you may choose to
> make 401K contributions based on a percentage of your income, but that
> is really just a tax deferral and you could end up paying more than
> your current bracket percentage on that income.
>
> Unless you chose to contribute a portion of an additional dollar to a
> tax deferred retirement account, you will pay 15% of it in taxes if
> you are in the 15% bracket. In any event, you will pay much less than
> 15% of your net income in taxes.
>