Quote:
Originally Posted by goof2
If you are talking about your tax bracket (otherwise known as your marginal tax rate) that is irrelevant. That only shows at what rate the last dollar you made that year was taxed.
The somewhat more relevant number is your effective tax rate, the percentage of taxes you paid out of your taxable income, and that isn't perfect either. Compare two people with the same family situation and income. Dude 1 (D1) contributes nothing to his 401k while Dude 2 (D2) contributes 10% of his pre-tax income. D1 will have a higher effective tax rate due to his own decision. Say D1 also rents while D2 bought real estate through a mortgage. D1 can't deduct anything while D2 can deduct the interest, property tax, and some other expenses he pays. Those to factors alone, and there are a ton of them, can affect the taxable income between the two by $10,000, $20,0000, or even more despite their gross income being the same. Additionally that money will be taxed in the top one or two brackets they are subjected to, meaning it will make the largest difference in their effective tax rates.
In the above scenario D1 isn't getting screwed by the government. He can end up with significantly more tax liability than D2 and has nothing to blame other than his own decisions.
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There are plenty of rich people don't own a home either.
The idea that someone should buy a home just because of the deduction opportunities is rather lacking (although I doubt that's what you actually think).
I see your point about 401k's though. Those contributions, along with the standard deduction and personal deduction, are going to be a much bigger benefit to a middle class person than they would to a rich person.