In the US, if you are in a particular tax bracket, only the income that falls withing the bracket is taxed at that rate.
EX.
Taxable Income is $50,000 – Tax Bracket is 20%
$0 to $11,000 is taxed at 10% = $1,100
$11,001 to $44,725 is taxed at 12% = $4046.88
$44,726 to $50,000 is taxed at 22% = $1,160.28
Total Tax = $6,307.16
If the entire thing was taxed at the bracket I am in, 22%, the tax burden would be $11,000
\[Note: These incomes are set to match the bracket for the particular country. I know $50,000 is not ¥3,300,000\]
I am being told by someone who will remain nameless for the sake of harmony that Japan is different and that taxes are done like this:
Gross income minus deduction (figured by Gross \* x% + set yen amount = deduction) That seems OK to me.
Take the remaining income and subtract fire insurance, medical bills, city taxes, etc. That leaves Taxable Income. Say ours is ¥3,300,000. That also seems OK to me.
Taxable income is ¥3,300,000, rate is 10% so Tax = ¥330,000
If we increase income by ¥100,000/year it puts us in 20% bracket
Tax on ¥3,400,000 at 20% is ¥680,000
So a ¥100,000 increase in salary would cost us ¥350,000 in Taxes
In this case, it would be better not to take the ¥100,000 salary increase.
I know Japan can sometimes do things way different than the US, but I just can’t imagine that this is true, that moving into a higher tax bracket means your entire salary is taxed at that rate. It has to be that only the ¥100,000 would be taxed at 20%.
Can anyone help prove that I am not insane?
by BWWJR
