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Originally posted by Cowperson+Aug 4 2004, 07:19 PM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Cowperson @ Aug 4 2004, 07:19 PM)</td></tr><tr><td id='QUOTE'>
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Originally posted by nfotiu@Aug 4 2004, 07:08 PM
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@Aug 4 2004, 06:45 PM
No problem  -- It's a fairly common misconception about our taxation system.# I actually had this discussion recently with a family member who was convinced that having an income in a higher tax bracket would result in considerably more taxes and even once turned down a promotion because of this belief.#
If this was the case, you wouldn't see many people take jobs that earn $35,000 to $40,000... (and there are a lot of them in this country!).
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There is one caveat to this whole thing, and I've seen it happen. The formulas used for calculating withholding are not as robust as the actual tax formulas. I believe the withholding formulas take a more simplistic approach and apply a flat percentage on your whole income depending on which withholding bracket you are in. Therefore if your raise just passes the threshhold, you can get a paycheque that is less. You do end up with more money overall once you fill in your tax return, but it is possible to end up with less on a paycheque by making more.
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I think any Canadian who has gone from $40,000 to about $60,000 in income is fairly astonished at how little they advance in terms of the money they take home.
Cowperson [/b][/quote]
One other tax myth I'd like to debunk is the American/Canadian myth.
I filled out tax returns for both countries using the exact same income for 3 years. Alberta/Canada taxes were always less than North Carolina/USA and Virginia/USA. And we get free health care in Canada, which is not at all insignificant. Americans can pay $1000/month or more if they go at it alone for health care coverage that is no where near as good coverage as the Albertan government provides.