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Posted on 07/18/2011 6:36:22 AM PDT by rhema
President Obama has been using the debt-ceiling debate and bipartisan calls for deficit reduction to demand higher taxes. With unemployment stuck at 9.2% and a vigorous economic "recovery" appearing more and more elusive, his timing couldn't be worse.
Two problems arise when marginal tax rates are raised. First, as college students learn in Econ 101, higher marginal rates cause real economic harm. The combined marginal rate from all taxes is a vital metric, since it heavily influences incentives in the economy—workers and employers, savers and investors base decisions on after-tax returns. Thus tax rates need to be kept as low as possible, on the broadest possible base, consistent with financing necessary government spending.
Second, as tax rates rise, the tax base shrinks and ultimately, as Art Laffer has long argued, tax rates can become so prohibitive that raising them further reduces revenue—not to mention damaging the economy. That is where U.S. tax rates are headed if we do not control spending soon.
The current top federal rate of 35% is scheduled to rise to 39.6% in 2013 (plus one-to-two points from the phase-out of itemized deductions for singles making above $200,000 and couples earning above $250,000). The payroll tax is 12.4% for Social Security (capped at $106,000), and 2.9% for Medicare (no income cap). While the payroll tax is theoretically split between employers and employees, the employers' share is ultimately shifted to workers in the form of lower wages.
But there are also state income taxes that need to be kept in mind. They contribute to the burden. The top state personal rate in California, for example, is now about 10.5%. Thus the marginal tax rate paid on wages combining all these taxes is 44.1%. (This is a net figure because state income taxes paid are deducted from federal income.)
(Excerpt) Read more at online.wsj.com ...
Get ready for the same effect on revenues as occurred under the last 70% marginal tax rate.
Mr Galt, will that be cash or barter?
democrats AND the rich are preparing to feast on the middle class, who they see as a bunch of uppity nouveaus!
That would appear true if one assumed the Democrat's goal was the founder's vision for a free people in a free land with government powers limited by the Constitution.
I observe the Democrats distain for the Constitution. Democrats provide evidence of their distain by their twisting of the Constitution’s words and meaning. Democrats, with support from the progressives, exercise far greater power over the people than the limited government allowed by the Constitution. The fact the Democrats seek additional powers over the people without the amendment process provides further evidence of their disdain for America’s Constitution.
The progressives are not the ignorant ones. The ignorant ones are the liberals who serve as the progressive’s useful idiots
Never underestimate the power of ignorant people in large groups.
“Our country is going down the tubes yet I never hear anything about cutting foreign aid; never. Why is that?”
Because foreign aid is a tiny portion of the overall budget. Defense, Social - Security, and Medicare/Medicaid are where the meat is. If you want to balance the budget, you have to address the big 3.
Actually, they didn't forget that. They just didn't realize it.
You're fudging the numbers a bit here.
A single teacher with no dependents and the standard deduction earning a gross salary of $60,000 would owe right around $3,000 in California income tax.
The Social Security and Medicare numbers are paid by both the employeer and employee, but each one has only half of the burden. It's fudging things to assume that every cent of SS and Medicare the employer pays would translate directly into take-home pay for the employee. If you're talking about salaries, it's misleading to include the employer share of payroll taxes in one half of the sentence but not in the other.
So when we're talking about a $60,000 salary, we're really talking about a 7.65% payroll tax. That's $4,590 from the employee, or something like that.
Now we've got income after payroll and state taxes of $7,600.
That amount is deducted from Federal taxes for a rough AGI of $52,400. And that leads to a federal tax tab of $9,288 based on the 2010 tax tables for single filers.
So that's $43,112 after-tax income on a $60,000 salary, for a total tax hit of 28.1%, not 45%. It's bad enough without exaggerating it.
“The progressives are not the ignorant ones. The ignorant ones are the liberals who serve as the progressive’s useful idiots”
Exactly. Right on the mark.
“You’re fudging the numbers a bit here...It’s bad enough without exaggerating it.”
I was citing an excerpt from the article.
The rest of the article explains the additional taxes that the California economist is referencing.
The Democrats, especially the limousine liberals, are hostile toward any upward social mobility. The Dem view is that the serfs need to know their place, and stay their.
As enunciated by Lenin, socialism's most deadly enemy is the Middle Class -- where upward mobility is a fact of life. Consequently, for socialism to succeed, the middle class must be destroyed.
Back when the marginal rates were around 70%, there were lots of legal deductions that would make the effective rate a lot less. Over the last 30 or so years, the marxists have taking those deductions out of the tax code little by little. They are still at it now by floating the idea of getting rid of the mortgage interest deduction.
I agree that foreign aid is a good starting point but even if we cut out 100% of foreign aid, it would only be a drop in the bucket.
Good point. They do have a lot of “hidden taxes”.
Another BIG problem is we need to PAYBACK what the government has already stolen from Social Security.
Try to explain to someone the reason they have to wait until htey are 80 to get SS is because their granddad voted for people who stole from him.
We need to start calling it what it is...stealing form our grandkids. We need to do like the rats and put poor innocent babies on TV and say a vote to not reform Washington is a vote to kill this baby.
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