If The Middle Class Gets A Tax Cut, So Do Those Making > $250,000

Ken AshfordEconomy & Jobs & DeficitLeave a Comment

Need we a reminder on how tax policy works?

Okay.  Here we go.

Suppose Obama gets his wish, and keeps the tax cut for those making under $250,000.  And let's say that he raises the taxes on those making $250,000 and from 33% to 36%.

Let's say that your income is $250,001.  How much more would you be paying in taxes than if the Obama pplan never went through?  Remember, your tax rate has jumped from 33% to %36.

The answer?  You will be paying about three cents more.  That's right. Three cents.

Why?  Because the 36% rate doesn't kick in until your $250,000 dollar of income.  That's what people don't realize.  They seem to think that the higher tax rate for upper-income means they will pay more taxes on ALL their income.  But that's wrong.  They are paying higher tax rates on only their higher income.

What does this mean?

For most earners making between $250,000 and $500,000 a year, the Obama plan would increase income tax liability by just a few hundred dollars — an average of $600, according to the Center for Economic and Policy Research’s Dean Baker.

Is this what the GOP is fighting for?  So that people unaffected by the recession can save $600 per year, while the country slips deeped into a deficit?