causes me to wonder what a proposal such as this would do to the overall numbers
8%: $0 to $23,850
18%: $23,851 to $96,950
25%: $96,951 to $206,700
27%: $206,701 to $394,600
35%: $394,601 to $501,050
38%: $501,051 to $751,600
40%: $751,601 or more
you know....... tax the rich
A few notes:
Adopting Fearless' proposal would reduce taxes for all MFJ's with taxable income less than $31,800. That break-even is as follows:
- At current they pay 10% of the first $23,850 or $2,385 then 12% on income from 23,851-31,800. That is $7,950 taxed at 12% which works out to $954. Add the $954 to the $2,385 and you get a total tax of $3,339.
- Per Fearless' proposal they would pay 8% of the first $23,850 or $1,908 then 18% on income from $23,851-31,800. That is $7,950 taxed at 18% which works out to $1,431. Add the $1,431 to the $1,908 and you get a total tax of $3,339.
Biggest tax cut is for a married coupe with a taxable income of exactly $23,850. Their tax drops $477 from $2,385 to $1,908.
Measured in dollars, the increase would be the most for the biggest earners but measured in percentage the biggest increase would be on a married coupe with a taxable income of exactly $96,950:
- At present they pay 10% of the first $23,850 ($2,385) then 12% on the income from $23,851 up to $96,950 which works out to $8,772 for a total tax burden of $11,157 or 11.51%.
- Under @FearlessF 's proposal they would pay only 8% on the first $23,850 ($1,908) but then 18% on the income from $23,851 up to $96,950 which works out to $13,158 for a total tax burden of $15,066 or 15.54%. The increase for a MFJ at $96,950 would be $3,909.
I find it interesting that although Fearless presented it as a proposal to "tax the rich", the biggest percentage impact would be on a married couple at just under $100k. For a couple at about three-quarters of a Million their absolute increase is more ($10,710) but their taxes are only going up by about 12% as compared to the couple at a little under $100k whose taxes would go up by nearly 45%.
The numbers:
Now, with all of that said,
@Cincydawg has said a few times in this thread that European Countries typically hit the middle class a LOT harder than we do here in the US. The reason is simply that they have to. As great as taxing "the rich" sounds on paper, in the real world it isn't easy. The very wealthy have a lot of flexibility. They can shift investments. They can spend a lot on accountants and tax lawyers to minimize their burden. At the end of the day, some of them can simply move. If the tax burden gets too heavy in the US, they can leave.
People with more moderate incomes simply don't have that much flexibility. It also isn't practical for the moderately well off to spend a boatload of cash on tax lawyers. Look at the chart above (either one). A MFJ Couple with taxable income of a little under $400k is paying ~$70k in tax now and would pay ~$80k under Fearless' proposal. If you pay a tax lawyer $5 Grand to look at it (and that would barely get you in the door with a truly high-end specialist), they'd have to reduce your AGI by about $20k (5%) just for you to break even. If you are REALLY wealthy the math works a lot better for an EXPENSIVE tax lawyer. If you have taxable income of $1M then you could pay $10k to a tax lawyer and you'd break even as long as they reduced your taxable income by $25k (2.5% at Fearless' proposal) or $27k (2.7% at current rates).
Final note:
If you had the data, it would be fairly easy to calculate what this proposal would have brought in "Ceteris Paribus" but the actual change is a lot murkier. "Ceteris Paribus" is Latin for "with other conditions remaining the same". It is a phrase that Economists use a lot because their models only really work if nothing else changes. The problem here is that an increase like this WOULD change "other conditions".
