User talk:FiveK/Marginal tax rate

Motivation behind the proposed changes

 * Change the emphasis from "last dollar" to "last amount"
 * 1) The actual first derivative of the tax code is not continuous.  Perhaps the simplest example is the federal tax tables. There, a single person with a taxable income of $92,000 pays exactly the same tax for the next $49. On the 50th dollar the tax jumps by $14.
 * 2) Using "amount" also better addresses cases in which the tax code is not locally progressive and one needs to evaluate the effect of larger contributions. E.g., getting past the SS tax "hump" or reaching various saver's credit tiers.


 * De-emphasize "tax bracket"
 * 1) Intent is to encourage people to look beyond the nominal brackets and understand their specific situation.
 * 2) E.g., the marginal rate may differ greatly from the bracket, and the marginal savings rate of a 401k or tIRA contribution may differ from the marginal tax rate of increased income, even for the same base income.

FiveK 02:54, 11 May 2016 (EDT)
 * Included some comments about "traditional vs. Roth" under "Using the marginal rate for investment decisions", as that is a noteworthy use of the marginal rate for an investment decision.