My New York State income tax refund finally arrived on Wednesday. It wasn't as much as I was expecting because it turned out I had made an error (using the wrong tax computation worksheet) in figuring my tax. This was a bit annoying although I can get some (but not all) of the difference back from New Jersey by filing an amended return which I did. Hopefully New Jersey will process this a bit faster than my original return. I was also annoyed to learn that although New York theoretically pays interest on refunds delayed more than 45 days this only applies if the interest is at least $1 so I was out of luck there too.
While looking over the New York tax computation worksheets I noticed something bizarre. Suppose a married couple is taking the standard deduction of $15,000 so that their taxable income (line 38) is $15,000 less than their AGI (line 33). Then if I have figured correctly, if their AGI is exactly $2,000,000 their tax will be $135,972.5 while if their AGI is just $50,000 more (that is $2,050,000) then their tax will be $179,487 or $43,574.50 more. This is a marginal rate of over 87%. Taking federal taxes into account some people in this situation seem to be facing a marginal rate of well over 100% for this income range. This makes no economic sense, it is just evidence that the New York legislature can't be bothered to write sensible tax laws.
Quote of the Day: Taxes Are Going Way, Way Down!
2 hours ago