A Brief Study of Taxes

I was cleaning up my hard drive today when I came across a spreadsheet I put together last year regarding tax rates and how they work. Anyway, it is interesting to look at how the tax law changes has affected taxes. For my spreadsheet I used the "married filing jointly" classification. Then I set up two formulas side-by-side for easy comparison of two households: one household has $500,000 in taxable income and other has $60,000 in taxable income. Here's what I found out:

        $500,000    $60,000
1998    $171,335    $11,295
2000    $170,389    $11,100
2001    $167,542    $10,850
2002    $163,758     $9,996
2003    $150,205     $8,620
2004    $149,642     $8,475
2005    $149,061     $8,330

The column on the left is the year. Notice there is no 1999 information because I couldn't find the info. The second and third columns are the amount of taxes that each income category would have paid. The family with the $500,000 in taxable income saw their taxes drop 13% from 1998 to 2005, while the family with the $60,000 in taxable income saw their taxes drop 26%.

It would be interesting to see how the cut in dividend taxes affected taxes. If anyone knows where to find information on who owns the dividend-paying stocks, please let me know.

Tags: Taxes, Tax Brackets