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http://www.fairmark.com/reference/2010reference.htm Consult the table. Its %x over $y. People on the top end are paying %10 more than in that bracket.

Actually, the actual tax rates are more complicated in that everyone pays an additonal 7% on income up to $106,800 (FICA). This means the "x%" column for singles should read more like "17%, 22%, 32%, 35%, 28%, 33%, 35%", with the middle "35%, 28%" being a split of the 4th row at $106,800. You'd end up with the following overall tax rate for the top of each bracket: 17%, 21%, 27%, 29%, 29%, 31%, 35% (assuming infinity for the "top" of this last one, as that's what it would approach).

So, what it means is that somebody earning as much money as you can imagine pays 35%, while those who earn around $100K pay 28%, which is only 7% less.

I have never understood this. If taxes are increased for you you're not going to be able to increase your total take home by reducing your tax bracket. For example say they increase the tax on income over $250,000. You still pay the same in tax rate as everyone else under $250,000 on your first $250,000 but now on income over that amount you pay an additional tax.

http://www.fairmark.com/reference/2010reference.htm
Consult the table. Its %x over $y. People on the top end are paying %10 more than in that bracket.

You're still going to take home more than if you were under $250,000, just not quite as much as before.

And rich people don't create jobs just because they have money sitting around to spend.

Correct, but burdening the wealthy individual with higher taxes in the form of blanket panaceas of "tax the rich" doesn't solve the OP's implication that Amazon, and the "rich" aren't being taxed enough. There are some rich people at Amazon. They are paying their individual income taxes. The company is hiring many people. Hiring people, creating jobs for people to provide for themselves is the greater good (and coincidentally putting money into the system).

    Jobs are created by demand for products and services. It does no good to be rich as can be if there are no people with enough disposable income of their own to buy the stuff you produce. The US economy is something like 70% consumer spending and when you increasingly polarize the income disparity it further reduces the ability of those on the lower end of the scale to spend which doesn't help the situation.

Are you asking Amazon to be a charity, in addition to the already blatant role of government-as-a-charity? I'm genuinely curious where you are going with this -- who do you think should be responsible for correcting the income disparity?

Minor children have no property.

False.

How can someone who cannot sign a binding contract own something?

I can only assume you're referring to sales contracts here.

First, it's not true that minors can't enter into binding contracts. What do you think happens when a minor goes into a store and buys something, entering into a verbal contract for that sale? Does the sale not really happen? (Minors can also enter into binding, explicit contracts for such necessities as housing and utilities, even when they can't sign other contracts.)

Second, sales contracts aren't a prerequisite to becoming the owner of property. You don't need to sign a contract to receive a gift, for example.

In general what you are saying in true, but there are certain kinds of assets called "dual basis" assets which can cause you to pay real money, even if you have never realized a gain. One example is Incentive Stock Options - if you exercise such options you might owe real alternative minimum taxes (AMT) even if you never put an actual penny in the bank from such stocks.

cf. http://www.fairmark.com/amt/dual.htm

he's talking about dividends. Since Google is pretty hardcore about never splitting stock, you will never get any dividends by purchasing Google stock. Investing in prettymuch any other company (besides Berkshire Hathaway and a few other notable exceptions) you will have a shot at getting dividends on a semi-regular basis. That's free stocks, which translates into free money on top of the increased valuation of your stocks over time ...

The problem here is although they are trying to model after Berkshire Hathaway, look at this 6-month trend: http://finance.yahoo.com/q/bc?s=GOOG&t=6m&l=on&z=m &q=l&c=%5EGSPC,%5EIXIC,%5EDJI: the results are suprising: they are only keeping up with the market. After we get over the first year of hype they are really doing no better than the aggregates. That's pretty sad. Now granted there is some volatility in there from the DOJ and the china stuff, they may rebound, but really they should be doing better. Maybe if they had stuck with the basics...

Tax brackets and earnings: Some people have in mind the general notion that their tax bracket depends on how much they earn. That's roughly true. But it doesn't mean you can hold onto the same tax bracket as long as your earned income stays the same. Your tax bracket depends on your taxable income, regardless of the source of that income. For example, you can move into a higher tax bracket because of increased investment income or a distribution from a pension plan -- or even because of a decrease in your deductions.

"If I have 120 dollars and I donate 20, I get taxed on the remaining 100 dollars (let's pretend it's 35%) - so I wind up with 65 dollars.

If I have 120 dollars and I don't donate anything, and I get taxed on the 120 dollars (and let's pretend that the tax rate on 120 dollars is 40%) I wind up with 72 dollars."

If that were the correct method then yes it would work like that, buuut....

Tax is a bit more exponetial....

Lets say I make a $28,000 a year... According to the 2006 schedule (being single and all) I get taxed at 15% which means I have to pay 4,200 in taxes and only get 23,800 of that.

Then I get a raise and make 32,000 and now I get taxed 25% which means I owe $8,000 and only get 24,000. Well damn... I'm only getting a yearly $200 dollar raise.

BUT! If I donate $2,000 of that and get back at the 15% bracket. I only owe $4,500 sooo... 30,000 - 4,500 = 25,500!!!

Thats $1,500 more money I get to keep.

The trick of deductions is that you have to get slightly below your bracket and you will see more money.

It's true, it is tough to afford a 2 Bedroom in SoHo if you only make $312,000 a year.

I'm sorry if you don't feel that the rest of America feels your pain.

Even if there are 50-55% taxes taken out, FOX is still paying that money. The voice actors are then paying it to the government. Also, I believe the tax rate works out to somewhere around 33%. It's a little wacky because you pay 10% on the first 10k or so, then ~15% up to 30k or so, etc. The top tax rate was 35% for 2004. That was for income above $319,000 a year. Note that under President Clinton, this tax rate was 38.5%, over $288k. For the purposes of this post, I used the Single brackets. When it comes to medicaid, SS, etc., over ~$88k or so of income, and your SS/MC taxes are capped. That cap is around $5,500 for SS. I couldn't quickly find a good source for the Medicare, but it slightly higher than social security.Source 1 Source 2 Source 3.

As I'm sure a lot of engineers discovered this year, the Alternative Minimum Tax wipes out any tax cuts at the middle and high end of the spectrum. The AMT is pretty much the reason the tax cut package went through, Dems can bash Dubya for the tax break without actually giving the tax break.

Back to the original point, the public doesn't care about privacy. They will gladly give up everything about themselves for $.10 off a Pepsi.

If you were to graph the tax rate vs. income, you'd see that the percentage increases gradually as income goes up. There are a few "corners" at the borders of the tax brackets. But it simply isn't true that being in a higher tax bracket means that all your income is taxed at that rate.

So you know, the original income tax was first instituted to help fund the civil war, at 1/2% tax. It was later repealed, as it was found unconstitutional in the courts for the government to tax income.

But congress tried again in 1913, and was a 1% tax on the top 1% wage earners (in 1913, those that earned $3k to $20k per year).

Fast forward to today, and take a look at how far we've let the government tax our earnings... today, the top 1% wage earners pay 38.6% of their salary in taxes, accounting for ~ 29% of the total (top 5% wage earners paid 50% of all taxes in 1999)

Now we have people saying, "I don't mind paying $0.01 for my emails"... What restraint has the government ever shown that next year it'll be $0.02, then $0.05 (who'll miss a nickle?), a dime... And where the hell will all this money go? into improving the internet infrastructure? Nooo, that's a private business. The money and accountability will disappear, probably into Medicare, Social Security, and all the other social programs that government isn't supposed to be in.

Government control is not a road we want to walk down folks. Yes, control of communications through taxation. I can't understand why the crowd complains when little things are being taken away, and the same people just turn around and hand the big ones over willingly.

Good point. There can be taxes on gifts. The situation is more complicated in various countries, and I know the USA gift tax is complicated by gifts over $10,000 and international gifts. Depending on how the money is given, the donor and/or recipient may have tax consequences (taxes or deductions).

I don't recommend this. I did it in my first startup and ended up a bit out in the cold - especially when the company failed. I do have about 40K shares worth of wallpaper though.

In the second job in which shares were offered, I negotiated a good salary with a decent amount of shares on top of that. I think of options as being worth $0 - they are not compensation for anything, they are incentive for me to stay through the vesting period.

I'm now in my third startup with options and I took the same approach this time - options are just icing on the cake if we build a successful business.

I know most people in this industry are more interested in the work than the money, but you have to be smart about the money too.

1.How long did you have to keep them ?

In all of my situations it's been a four year vesting period. The vesting increments over the course of those four years. It's not uncommon that they would vest 1/48th per month over that period. Sometimes you'll find a "one year cliff" in which nothing vests for the first year but at one year you magically vest 1/4 of your options and then 1/48th of the total options per month after that. I heard of one place that vested 1/4 per year rather than incrementally per month.

Also, be aware that if your company completes an IPO you will probably be subject to a lockout period of from 6 months to a year. The guys at VA Linux weren't able to get in on those high prices initially - they are still holding theirs.

It depends on your agreement, but there is often a clause stating that the options vest immediately in the case of the company being acquired.

2.What was the increase (or decrease) in value ?

First Time: $0
Second Time: ~$4 per share
Third Time: Still waiting on that one

3.Do you think it's a good idea ?

Of course, but I've been through about 4 companies in the last six years, so I don't know if I'd listen to me if I were you.

4.What are the "gotchas" ?

Taxes. Spend a lot of time at the Motley Fool messages boards dealing with employer granted stock options and take a look at this www.fairmark.com site. There is a lot of information here.

There are different types of options, so be aware that different laws apply differently to them.

Stress. As a shareholder, you get to be stressed when the company is on the ropes. Of course, there's the flipside. However, have you looked at the success rate figures for startups?

Good luck.

Troy Denkinger