Budget And Taxes

Brace yourselves:  some of you will find this post to verge on the pinko commie!

This article on the proposed budget is in line with other analysis I've seen (and is written in plain English, a bonus!). For historic income tax info, see this site.

But here's what you really want to know:  the top 1% includes only those families making over $388,000--and what the tax site's table doesn't show you is that most in the top 1% make far more than that (think many many millions a year).  ALSO:  the average tax rate for the top 1% is only about 20%.  When you see the numbers in the high 30s, that's their marginal rate--what they pay on the last dollars of their income.  That's (one reason) why the argument that raising taxes on the wealthy removes the incentive to become rich is absolute bunk:  you're paying exactly the same rate as everyone else on your first $250,000 or $388,000 or whatever, and only pay the higher rate on the money you make after that.  So would you rather have 80% of $10, or 80% of $10 plus 70% of $100?  Gee, let's see...  I'll take the $78, not the $8, thanks.

We're not in the top 1%,  but we probably will be within a few years (if--knock on wood--we both keep our jobs), which is precisely when these tax increases will hit.  So I'll be (I hope) working in a job I love in a city I love, making more than I would be anywhere else but taking home less than I would living almost anywhere else because of city taxes...  And I still think this tax reform is a darn good idea.  It doesn't solve the inequities and iniquities of our current tax system, but it's a step toward a less destructive system, and a step toward investing in some of the right priorities (such as education and benefits for veterans).

And that concludes my little tax rant, which I am sure is pretty much opposite to everything you hear on certain "news" channels (or from certain of my beloved family members).  But I will add this:  many of our current economic troubles can be traced, directly and indirectly, to the long-term transfer of wealth from the middle class to the wealthy.  Stopping that trend and redressing some of the past harm is pure national self-interest.

I don't think I'm a pinko commie and I'm very much in favor of making more money my own self (shoes to buy, people!), but once in a while I suppose my religious ancestry exhibits itself in this crazy streak of wanting fairness, even if it may cost me a pair--several dozen pairs--of shoes.

Comments

[Denise]

Right, and when the middle class pay more taxes, they may have to give up LUXURIES like health care and college, whereas the rich may have to give up necessities such as boats, or...another pair of designer shoes. Poor little rich people. PS. I hope you are in that category someday! And I'm glad you're willing to pay your fair share.

[LL]

I enjoyed this post a lot and agree 100%. I'm so tired of hearing people who make $200,000 a year bitch about taxes and act like the poor are SO LUCKY they don't have to pay as much. I hate taxes too- I would love to keep every penny I make (my god, the shoes!), but I will take my high salary and my high taxes any day over making 20,000 and paying almost nothing.

[Kady]

So happy to see this. I've written about this a lot too. What I often wonder about is the tax bracket of those who complain about tax increases. For the most part, it seems the complaints come mostly from those earning income that I believe must be below (and maybe just below) the Obama $250 threshhold (see, e.g., Joe the Plumber). I wonder if this isn't because for this group of taxpayers, a change in the marginal tax rate does in fact mean the difference between being "rich" (i.e., private school, nicer cars, shoes, etc...) and merely middle class. And even while Obama doesn't propose to raise their taxes (for now), that perception clouds their evaluation of his tax program. For most, once you've surpassed that 1% threshhold (especially if you don't live within one of the costly coastal metropolitan areas), you pretty much have more than enough discretionary income to have almost all of the trappings of wealth (and then some).