Upper-Income Taxpayers Look for Ways to Sidestep Obama Tax-Hike Plan
Okay, if you haven't caught it yet, here's the catch. Income Taxes are taxes that are paid as a percentage of income. But to get a story, ABCNews managed to find a reporter who doesn't understand that, to ask a bunch of questions of people who don't get that either. It's like having Jessica Simpson do a story on Buffalo Wings, then printing it on the front page because she found some people who say "they're hard to catch" because "they fly away".
Let's say the plan goes into effect. If a taxpayer makes $249,999 he'll pay X dollars in taxes. If he makes another $2 that year, how much tax will he pay?
$X + $0.66. Whereas if the threshold wasn't there, he might pay $X + $0.62. Only the dollars ABOVE $250 get taxed at a higher rate.
Here, The New Republic puts it better:
Wealthy Idiots Meet Idiot Reporter
Now, the obvious objection here is that the tax code doesn't work that way. A tax increase affects the marginal dollar that a person gains. That's [sic] means only every dollar over $250,000 is taxed at a higher rate. Obama is not proposing a tax system whereby somebody who goes from $249,999 to $250,000 suddenly becomes poorer. Nobody has ever enacted a tax hike like that in the history of the United States.
Here's to months of informed, intelligent, productive and progressive debate about tax policy!
2 comments:
that is all true until you accidentally trigger AMT by a couple of $
AMT! Okay, I promised productive discussion. (aka "no rants). For anyone who needs caught up:
Congress has failed to fix the Alternative Minumum Tax for decades. In geek terms, it's a GIANT HACK on the tax code, to prevent wealthier people from exploiting some holes in the tax code. It has since started to affect some middle-class taxpayers, while only partially solving the original problem.
The stimulus package has another "band-aid" for AMT in there, which amounts to some small percentage of the whole bill, I think single digits.
This was already going to be fixed this year. Mandatory. So:
1. They allocated some of an already-too-small stimulus package to something they were already planning on doing.
2. They still failed (and obviously put off) fixing the actual root of the problem.
This was one of my least favorite things about the stimulus bill.
Post a Comment