Re:Divorce rates in America soar 34% during Covid; surge not...
by kilburn on Wednesday September 02, 2020 @02:00AM
(#24350421)
It makes sense. Income taxes are progressive, which means you pay (percentually) more the more you earn.
Let's see an example. Say that the payer earns 120k pre-tax. Now:
a) If you tax the recipient the judge orders a 60k/60k split. After the split both parties get taxed for 60k, which lands them on the 22% marginal tax rate bracket. In the end each party effectively pays 11k in taxes, and hence gets 49k post-taxes.
b) If you tax the earner they pay taxes first, hitting the 24% tax rate bracket and effectively paying ~29k in taxes. So you spit the remaining 91k and each party gets 45.5k post-taxes.
Let's see an example. Say that the payer earns 120k pre-tax. Now:
a) If you tax the recipient the judge orders a 60k/60k split. After the split both parties get taxed for 60k, which lands them on the 22% marginal tax rate bracket. In the end each party effectively pays 11k in taxes, and hence gets 49k post-taxes.
b) If you tax the earner they pay taxes first, hitting the 24% tax rate bracket and effectively paying ~29k in taxes. So you spit the remaining 91k and each party gets 45.5k post-taxes.
Definitely a lose-lose.
[1] https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...