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 ...
Geez, they published an article with a fudge-fest like that? You’d think they’d know that both California and federal income tax systems have multiple brackets.
You are absolutely right. Way too many people—including a lot of conservatives—seem to think there is someone out there who will be able to pay back the trust fund so that they can get their full benefits without a massive tax increase on young adults in their 20s and 30s. I always tell those people that if they want to know who took that money, take a look in the family album at a picture of grandma and grandpa, or look at the headstones in the graveyard. There is no easy answer. Either cut Social Security and Medicare or raise taxes on young people who really didn’t create the mess and are probably not very well of economically.
You know the commercial the rats ran against the Ryan budget to win that house seat in NY where they pushed grandma off a cliff?
We need to do an equally effective ad and tie it to the babies and grandchildren.
Maybe show a new born and then show that baby 5 years later (older) and starving for food. Then show them working as slaves to teh state when they are 12 just to pay for the bloated government. Then say this is what the Democrats want for your future. Vote to stop the democrats from destoying your childs future.
I always thought a good commercial would be showing a loving grandma and grandpa getting a visit from their teenage grandson or granddaughter. Then show the grandparents sneaking into the kids room at night and stealing money out of their wallets.
That’s good, but it will cause us to lose because the old people will be ticked off. You need to paint the government as the thief not granny.
My company has a "key employee" program that permits salary deferral. If the rates become intolerable, I can do the equivalent of sitting on my hands by having a significant part of my salary deferred. There is a risk. If the company becomes insolvent, I may never get that money. The alternative is to take it and lose 70% to taxes. I'm risking losing 100% versus 70%. If the approach works, the deferred salary could be drawn at a future time when my annual income is lower or nil e.g. retirement. Likely a lower tax bracket at that time.
Wow - warm up the crystal ball!!!
Let me take this one Alex Trebek, “What is becuase foreign aid is less than 1% of the budget”
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