Taxing the rich - what is the cutoff?

[firstdown]

Also how many people making around 250,000 will decide that it does pay to make the 250,000 and instaed make 245,000 and still bring home more money then if they make $250,000. Heres the math. If a person makes 250,000 their additional tax is $7,000 which drops their pay to 243,000 and if they made $245,000 they do not have this additional tax. For people who have their own business they would just change how they pay themself. For the person who said they only work 2 months to pay taxes here is the math. Their tax bracket is around 33% and 33% of 12 months is 3.96 months or around $82,500 if making 250,000. If we jump that an additional 3% now they are working 4.32 months to pay taxes. I just feel thats not fair.

[onlydarksets]

Originally Posted by firstdown

Also how many people making around 250,000 will decide that it does pay to make the 250,000 and instaed make 245,000 and still bring home more money then if they make $250,000. Heres the math. If a person makes 250,000 their additional tax is $7,000 which drops their pay to 243,000 and if they made $245,000 they do not have this additional tax. For people who have their own business they would just change how they pay themself. For the person who said they only work 2 months to pay taxes here is the math. Their tax bracket is around 33% and 33% of 12 months is 3.96 months or around $82,500 if making 250,000. If we jump that an additional 3% now they are working 4.32 months to pay taxes. I just feel thats not fair.

That's the marginal tax rate, not the average tax rate. You pay the percentage on the bracket in which that particular dollar of income falls:
Tax rate - Wikipedia, the free encyclopedia

[onlydarksets]

Originally Posted by onlydarksets

That's the marginal tax rate, not the average tax rate. You pay the percentage on the bracket in which that particular dollar of income falls:
Tax rate - Wikipedia, the free encyclopedia

Here's a better explanation:
Progressive tax - Wikipedia, the free encyclopedia

[Schneed10]

Originally Posted by firstdown

Also how many people making around 250,000 will decide that it does pay to make the 250,000 and instaed make 245,000 and still bring home more money then if they make $250,000. Heres the math. If a person makes 250,000 their additional tax is $7,000 which drops their pay to 243,000 and if they made $245,000 they do not have this additional tax. For people who have their own business they would just change how they pay themself. For the person who said they only work 2 months to pay taxes here is the math. Their tax bracket is around 33% and 33% of 12 months is 3.96 months or around $82,500 if making 250,000. If we jump that an additional 3% now they are working 4.32 months to pay taxes. I just feel thats not fair.

Bad math, but I suspect just about everyone in this thread is making the same mistake.

They would tax an additional 3% only on the amounts beyond $250K.

So if you make exactly $250K, your tax is not affected. If you make $251K, they take 3% of the money BEYOND $250K. So it would be 3% of $1000. Or $30 extra.

That's the biggest reason why those making $250K wouldn't feel it at all. If you make $500K, you're going to feel an appreciable difference in your tax bill, but you make so darn much it wouldn't be a problem.

[saden1]

Originally Posted by firstdown

Also how many people making around 250,000 will decide that it does pay to make the 250,000 and instaed make 245,000 and still bring home more money then if they make $250,000. Heres the math. If a person makes 250,000 their additional tax is $7,000 which drops their pay to 243,000 and if they made $245,000 they do not have this additional tax. For people who have their own business they would just change how they pay themself. For the person who said they only work 2 months to pay taxes here is the math. Their tax bracket is around 33% and 33% of 12 months is 3.96 months or around $82,500 if making 250,000. If we jump that an additional 3% now they are working 4.32 months to pay taxes. I just feel thats not fair.

You do realize that it's a progressive tax don't you? In 2008 you pay 33% on anything above $164,550 (you pay .33 on 85K not the entire 250K).

[SC Skins Fan]

Originally Posted by saden1

You do realize that it's a progressive tax don't you? In 2008 you pay 33% on anything above $164,550 (you pay .33 on 85K not the entire 250K).

Your fuzzy liberal math makes my head spin. Flat tax baby!!

[firstdown]

Originally Posted by saden1

You do realize that it's a progressive tax don't you? In 2008 you pay 33% on anything above $164,550 (you pay .33 on 85K not the entire 250K).

What source do you have that says its a progressive tax. I did find that he also wants to increase SS tax for people making over 250,000.

[onlydarksets]

Originally Posted by firstdown

What source do you have that says its a progressive tax. I did find that he also wants to increase SS tax for people making over 250,000.

http://www.thewarpath.net/parking-lo...tml#post453152

[firstdown]

Originally Posted by onlydarksets

http://www.thewarpath.net/parking-lo...tml#post453152

So for a link I get someones post here on this thread? I was looking for a real source. I did not see any links on that page so I'm assuming it was a post you directed me too.

[onlydarksets]

Originally Posted by firstdown

So for a link I get someones post here on this thread? I was looking for a real source. I did not see any links on that page so I'm assuming it was a post you directed me too.

I posted links in this thread in response to your initial post about people gaming the system by making $245k instead of $250k.

United States

See also: Income tax in the United States and Taxation in the United States The progressive aspects of the Federal income tax rates in the United States have varied widely since 1913. For example, in 1954 the Congress imposed a Federal income tax on individuals, with the tax imposed in layers of 24 income brackets at tax rates ranging from 20% to 91% (for a chart, see Internal Revenue Code of 1954). As of 2006, there are six "tax brackets" ranging from 10% to 35% used to calculate the percentage of taxable income (of individuals) that must be paid to the United States Treasury. If taxable income falls within a particular tax bracket, the individual pays the listed percentage of income on each dollar that falls within that monetary range. For example, a person who earned $10,000 in taxable income (income after adjustments, deductions, and exemptions) for 2006 would be liable for 10% of each dollar earned from the 1st dollar to the 7,550th dollar, and then for 15% of each dollar earned from the 7,551st dollar to the 10,000th dollar, for a total of $1,122.50. This ensures that every rise in a person's salary results in an increase of after-tax salary. The Treasury Department in 2006 reported, based on Internal Revenue Service (IRS) data, the share of all federal taxes paid by taxpayers of various income levels. The data shows the progressive structure of the U.S. federal tax system that reduces the tax incidence of people with smaller incomes, as they shift the incidence disproportionately to those with higher incomes - the top 0.1% of taxpayers by income pay 17.4% of all federal taxes (earning 9.1% of the income), the top 1% pay 36.9% (earning 19%), the top 5% pay 57.1% (earning 33.4%), and the bottom 50% pay 3.3% (earning 13.4%).[23]
However, if the federal taxation rate is compared with the wealth distribution rate, which was studied in A Rolling Tide: Changes in the Distribution of Wealth in the U.S. by Arthur Kennickell at Levy Economics Institute, the net wealth (not only income but also including real estate, cars, house, stocks, etc) distribution of the United States does almost coincide with the share of income tax - the top 1% pay 36.9% of federal tax (wealth 32.7%), the top 5% pay 57.1% (wealth 57.2%), top 10% pay 68% (wealth 69.8%), and the bottom 50% pay 3.3% (wealth 2.8%).[24] Other taxes in the United States with a less progressive structure or a regressive structure, and legal tax avoidance loopholes change the overall tax burden distribution. For example, the payroll tax system is regressive on income with no standard deduction or personal exemptions taxing only the first $97,500 for 2007 from gross wages, and none earned from capital investments or interest. The Center on Budget and Policy Priorities states that three-fourths of U.S. taxpayers pay more in payroll taxes than they do in income taxes.[25]

[firstdown]

Originally Posted by onlydarksets

I posted links in this thread in response to your initial post about people gaming the system by making $245k instead of $250k.

My point wasn't about people breaking the law but when a person is self employed they can spend the money on the business keeping their salary under the $250 mark.