“What would be the disincentive for state or locals to not increase taxes (up to 50%)”
That’s right, but it’s even more complicated than that. Most of us high income folks have many tax deductions that reduce our total tax burden to something like 20-30%. If we all accept a 50% limit in total then BOOM! You pay 50%! No tax deductions. Which is exactly what Obama is proposing for high income folks, dropping the home mortage deductions and the charitable giving deduction. Really the best system would be the Fair Tax www.fairtax.org, but that is impossible with our current leadership....
“That’s right, but it’s even more complicated than that. Most of us high income folks have many tax deductions that reduce our total tax burden to something like 20-30%. If we all accept a 50% limit in total then BOOM! You pay 50%! No tax deductions. Which is exactly what Obama is proposing for high income folks, dropping the home mortage deductions and the charitable giving deduction. Really the best system would be the Fair Tax www.fairtax.org, but that is impossible with our current leadership....”
There is no proposal to drop any deductions. There is no proposal to set taxes at 50%. It is simply a cap.
You are right that Obama would love to eliminate tons of deductions and raise the tax rate to punishing levels. And he is GOING TO DO IT. If we don’t take some action now, those people currently paying 20-30% are going to find themselves in the 60%+ bracket overnight.
Think of this cap like a governor on an automobile that limits your speed to 50 mph. Nothing is preventing you from driving lower than 50 mph, but you can’t go over 50 mph.
This cap wouldn’t prevent the government from keeping taxes below 50%, but it would prevent Obama from rasing taxes over 50%.
“That’s right, but it’s even more complicated than that. Most of us high income folks have many tax deductions that reduce our total tax burden to something like 20-30%. If we all accept a 50% limit in total then BOOM! You pay 50%! No tax deductions. Which is exactly what Obama is proposing for high income folks, dropping the home mortage deductions and the charitable giving deduction. Really the best system would be the Fair Tax www.fairtax.org, but that is impossible with our current leadership....”
Understand also that it is small businesses that are going to get hit the hardest with the tax increases Obama proposes (the people that we need to create jobs.)
My guess is the tax breaks for the super-rich that lower their burden to 20-30% are not going away, despite the fact that Obama seems intent on punishing the super rich.