drachefly wrote:No, it still doesn't work out. The whole point of a marginal tax rate is that you pay that rate only on the dollars it applies to. A billionaire pays the same tax rate as I do on our respective $30kth dollars. The billionaire pays a higher tax rate than I do (at least in theory) on their $1Mth dollar.
This is all perfectly correct, but sadly does not apply in this case. This is not about tax brackets, but additional tax payments kicking in at a particular threshold.
My University education was paid for by effectively a government loan scheme, that states that if my before-tax pay in any given fortnight goes past a certain point (roughly $1750), then the scheme requires that additional
taxes be paid equal to a certain proportion of my wage, which then goes towards my uni debt.
Now, for just a single week's pay, that's not a major issue - I just pay a little extra. However, taxes on bonuses are calculated assuming that bonus was averaged out evenly across the financial year, and take my current pay as the baseline into consideration, not my previous pays (sadly, I just recently got a payrise, hence the issue). So, when the tax was calculated, it meant that I effectively have to backpay all those additional taxes.
Because of the rather inaccurate way this has all been drawn up, odds are excellent that I'll get some of this back at tax time, but certainly not all of it. And since I'll be starting on weekend work at the start of the year, I shouldn't have this issues next year, since I'll be making the threshold for uni debt repayment most pays, thus it won't have to be backpaid later on. So yeah, my bonus gets eaten up entirely by tax.