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posted: 5/16/2013 4:40 AM

Average wage earner needs definition, too

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Average wage earner needs definition, too

In a recent letter (Depends on your definition of "rich," May 11), the writer claims to be "an average American paying about a 30 percent tax rate" and would like not to be among those considered "rich" in any new tax law proposed by President Obama.

If we need to define "rich," then we probably need to define "average" as well. U.S. Government statistics provide both the median and average household incomes. The median household income in 2011 was $50,100. The average household income was $69,821. (The grossly inflated incomes of those at the very top pushes the average well above the median.)

The tax owed by those with the average household income is easily calculated using Form 1040 and the Tax Rate Schedules for 2011. For a single person taking one exemption of $3,700 and a standard deduction of $5,800, the adjusted gross income (AGI) becomes a taxable income of $60,321. That person is in the 25 percent tax bracket and would pay $11,205 in income tax, or 16.0 percent of AGI.

For married persons filing jointly, and taking two exemptions and two standard deductions, the household income of $69,281 becomes a taxable income of $50,281. That couple is in the 15 percent tax bracket, and their tax would be $6,692, or 9.6 percent of AGI.

For married persons filing jointly to fall into a tax bracket higher than 28 percent, their taxable income would have to be greater than $212,300. A single person's taxable income would have to be more than $174,400. Such incomes might not make them "rich" but neither do they make them "average."

Even though such incomes are far above the average, they still fall well below President Obama's original suggestion of $250,000 as the income level below which nobody's tax rate would be increased.

Donald G. Westlake


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