Skip to comments.The Stealth Tax Hike: Why the new $450,000 income threshold is a political fiction
Posted on 01/05/2013 9:54:12 AM PST by SeekAndFind
Anyone still need a reason to abandon "grand bargains" and deals negotiated between this President and GOP Congressional leaders? Here it is: The revival of two dormant provisions of the tax code means the much ballyhooed $450,000 income threshold for the highest tax rate is largely fake.
The two provisions are the infamous PEP and Pease, which aficionados of stealth tax increases will recognize immediately as relics of the 1990 tax increase. Those measures, which limit deductions and exemptions for higher-income taxpayers, expired in 2010. The Obama tax bill revived them this week. It isn't going to be pretty.
Under the new law, some of the steepest tax increases may fall on upper-middle class earners with incomes just above $250,000. Here's why:
During the negotiations, the White House won a concession from Republicans to allow phaseouts for personal exemptions and limitations on itemized deductions, starting at an income of $250,000 for individuals and $300,000 for joint filers.
The Senate Finance Committee informs us that in effect the loss of the personal exemptions, currently $3,800 per family member, can mean a 4.4 percentage point rise in the marginal tax rate for a married couple with two kids and incomes above $250,000. A family with four kids in that income range faces about a six percentage point marginal rate hike. The restored limitations on itemized deductions can raise the tax rate by another one percentage point.
High-income Americans with incomes of more than $1 million may lose up to 80% of their itemized deductions for home mortgage payments, health care, state and local taxesand charities. Cue the local symphony's development office.
Add it together and families in the 33% tax bracket could see their effective marginal rate paid on each additional dollar earned rise to above 38%.
(Excerpt) Read more at online.wsj.com ...
And Obama says it still is nowhere near enough
When government creates a tax advantage for some, it invites fraud. Eliminate all tax breaks and reduce the tax rates.
“Well Cynthia, it looks like we’re going to have to sell the second house in the Berkshires”
Cynthia: “And how much do we have to pay in taxes after we sell the house?”
Elections have consequences. Until people start to really feel the effect of bad policy there will be no changes in Washington.
People this week on twitter started to question why their checks were a bit smaller.
Obamugabe makes me SICK. His juvenile hatred for success is disgusting....same goes for his anti-liberty party, the DEMONRATS.
I chuckle when reading “People this week on twitter started to question why their checks were a bit smaller”. Obama was very effective in getting the Twitter vote. Now they can see it has consequences.
Elections have consequences, yes. One of them was that Republicans kept the house. But they barely even went through the motions of horse trading with, let alone opposing, the senate and president. We ostensibly have no opposition party.
Can they? Why wouldn’t they just blame it on Republicans and/or rich people, like everything else?
I’m sick of this government.
There will be a 3.8% 0bamacare tax on the sale of your home in the Berkshires.
So I would guess when all is said and done after the sale of your home in the Berkshires...
You would be looking at 4.4% + 3.8% = 8.2% additional tax on the home.
USA health costs are higher than Europe because the care is way better and also provision has to be built in for the inevitable lawsuits. So unless someone has invented a method of generating money from nowhere, tax rates will have to go up greatly on everyone until they at least equal European rates, or are greater if you want to keep the superior standard of care. Elections have consequences!
Simple. It takes a brain to know if its raining instead of peeing on your leg.
“People this week on twitter started to question why their checks were a bit smaller.”
You have to wonder, is there a neural connection somewhere in there...and if so, how would it go?
“I have my taxes taken out of my paycheck, I don’t really pay taxes, my employer pays them.”
“I don’t care if they raise taxes on the rich, it won’t affect me and it’s the right thing to do. Screw them, they can pay a little bit more”.
“Wait, my paycheck is a smaller number. I think that means I am getting paid less.”
“How can that be, I was told my taxes would not change and I’m not rich so how can this be? Of course I believe in green energy and Nicki Minaj is da bomb!”
Increase Tax Rates or Tax Revenues? Raising the former does not equal an increase in the latter. Love, Arthur Laffer.
Combined with Obamacare, increasingly greedy states, and the Feds going after everything, many of these geniuses are going to get bit in the a$$, which might ... might, finally wake them up.