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Originally posted by Hockey_Boy+Aug 5 2004, 01:45 AM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Hockey_Boy @ Aug 5 2004, 01:45 AM)</td></tr><tr><td id='QUOTE'>
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Originally posted by Cowperson@Aug 4 2004, 07:19 PM
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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
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I guess that's a matter of perspective.
Take someone who earns $40,000 a year, living in Alberta. He gets takes 16% on the first 35,000 for a total of $5,600. On the other 5,00 he gets taxed at 22% or 1,100. The provincial rate is 10% making that 4,000. The total taxes paid are 10,700 with a net income of 29,300.
Now take someone makig 60,000 in the same province. 5,600 in taxes paid on the first 35,000 and 5,550 and the other 25 grand. Lets not forget the provincial taxes at 6,000. The total amount paid in taxes is 17,100 and a net income of 42,900.
That's a difference of over a thousand a month, clear. That would make quite a differnce in my book, unless my math is completely off. Seeing as how I just got back from vacation, that is entirely possible. [/b][/quote]
You forgot the Provincial exemption in the province of Alberta. Its roughly $14K. You also didn't use the Federal exemption in your calculations
If you take into account the exemptions, the $40K earner's after tax income is $32,280 and the $60K earner's after tax income is $43,700 for a difference of $11,420. Which is just under $1000 a month
