[quote=bearishgurl]Very interesting, brian. I will look at the maps when I get more time but it appears they are using income as one of the criteria and not net worth. Many people with high net worth have a low income and vice versa.
Does this “Map of America” take into account the many folks who take regular draws off tax-free and tax-deferred income and pay no taxes on the draws? Is SS and passive income counted as “income” in the Map of America? What about folks getting $2500 and up per month SSDI? (I know several and they are not required to file tax returns.)
Who has more discretionary income, a passive income citizen in a zero tax bracket who is living in a paid-for residence with Prop 13 tax treatment on =<$50K a year w/1 dep or a worker-bee making $175K-$200K per year as W2 income with 3 deps, who pays 40% of their net income on PITI??[/quote]
I guess the question is what is considered income here. If it's only looking at wages, then what you say is true.
If it's looking at all taxable income (more likely) then it would include pretty much everything except withdrawals from Roth IRAS and interest from Tax sheltered bonds (I bonds).
Even most SS can get taxed if there are other forms of income.
Traditional IRAs get taxed as the money is withdrawn
Interest and dividends on passive investments are taxable. So are capital gains.
My dad's tax bills were quite a bit higher than mine after he retired, paid off the house, etc... no deductions, required minimum distributions on his IRAs, pension and SS... he had a lot of "income" after he retired... and the government got it's share.