Explaining Different Income Tax Values


1 comment

  • Avatar
    IMPLAN Support
    Hi Marty, Great question and it took us a while to dig down to get the answer concrete. There is a cap on the level of income that gets taxed for Social Security. Any income above and beyond that amount is not taxed at all for SS – so different levels of high earners across places will cause some differences as well. This would cause a lower calculated “rate” because the tax rate is not being applied to all of the EC in that region. Thus in the circumstance you are working with the average Household Income for the county should be higher than for the MSA creating the appearance of higher tax rate at the MSA level. One way to resolve this would be do an MRIO analysis for the MSA. This way you would have the county's level of income affecting the collected taxes, but still see the linkages and trade movements of the MSA.
    Comment actions Permalink

Please sign in to leave a comment.