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Saturday, October 22, 2016

President Obama wants to raise the top marginal income tax rate on salaries and other ordinary income from 35 percent to 39.6 percent by letting the extended temporary Bush tax cuts expire at year-end.

Mitt Romney wants to drop the top rate by a fifth to 28 percent (and running mate Paul Ryan has called for a top rate of 25 percent).

So who pays the 35 percent rate? How much do they pay? And how much more would they pay if the Clinton-era rate of 39.6 percent were restored?

As this graphic shows, had the 39.6 percent rate been in effect in 2009, a few people making as little as $100,000 to $200,000 would have been affected. The total increase per taxpayer in that large group would be less than a penny each.

The tiny group of 8,274 taxpayers who made more than $10 million in 2009, and collectively reported 3.1 percent of all the adjusted gross income that year, would pay on average $687,500 more if the permanent Clinton rates return.

That is 2.4 percent of their average $29 million adjusted gross income.

The reason the increase is not 4.6 percentage points (the difference between 35 and 39.6) is that only about half of their money is ordinary income, while much of it is long-term capital gains and qualified dividends taxed at 15 percent.

And why do 715 of the 13.5 million taxpayers in the $100,000 to $200,000 group pay the 35 percent rate, which formally starts at $372,950? Blame it on the complexities of the tax code.

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Copyright 2012 The National Memo
  • chisolm

    These numbers perfectly illustrate that raising taxes will not even put a small scratch on the defecit/debt even if all the increases were put toward reducing the debt. Keep in mind, many of the taxpayers targeted for increases are nothing more than small business owners that will be forced to cut their spending by reducing their expenses. In many cases, the largest expense they have is labor, so who really pays? You guessed it, people working for those businesses and the consumer. Insisting on these tax increases is only a ploy to create even more class warfare.

    • Ed

      Any business with more than 200 employees is NOT a small business. Especialy if privately owned with no shareholders except family.

    • Unfortunately I disagree with you on the people who are making this kind of money as I have in my family alone 10 people who are in this income bracket and are not small business owners or job creators they all work for someone else in a regular job.

      • chisolm

        So you believe the 10 members of your family in the targeted income brackets should have more of their income confiscated by the government? I believe they will spend their money much wiser than government.

    • bck2yu

      You’re wrong.
      The “ploy” is comparing what would be gained in revenues from increased taxes on the rich to the CURRENT debt. Had the wealthy been paying taxes at fair rates over the past four decades, the govt would have had billions in additional revenues over many years, plus interest. That would have reduced borrowing and the debt. The govt isn’t borrowing from China to subsidize social programs for the poor and needy. It is borrowing to pay subsidies to the wealthy, to make up for the billions in taxes that have gone uncollected.
      10% of Americans own 90% of our wealth; 90% of Americans divvy up the little remaining. Put in numbers, 30 million own nearly all of our wealth; 280 million own virtually none.
      THAT is the reason why jobs are scarce, and will be more scarce in future. Millions of American jobs have been exported elsewhere chasing low wages in countries where worker benefits and safety regulations are nonexistent. Those jobs aren’t coming back. The increased profits have been funneled to the wealthy…who now complain that they will not be able to create jobs if their taxes are increased!
      Romney, and others like him, are at the forefront of this massive confiscation of wealth. And Romney will push for policies that INCREASE revenues to the wealthy. He’s not about to do anything to help the 90%.

    • johninPCFL

      “small business owners” who take home more than $250k after all business expenses have been deducted. Their taxes on the $250k they take home would go from $87,500 today all the way up to $99,000.

      How many jobs will they create if they get to keep the $11,500? If Mitt Romney can’t create a single job with $250,000,000 in the bank, how many will $11,500 create?

    • ralphkr

      It would be interesting to hear your explanation as to why tax revenue went up and business greatly increased hiring after Clinton raised the top tax rate. I agree that raising the top tax rate won’t help much but I don’t agree that that is a valid reason not to do it. Following your reasoning that the revenue raised is miniscule then it stands to reason that cancelling all income tax shall have but a modest effect.

    • You can’t read the chart and understand it, can you.

      • chisolm

        We don’t have a revenue problem we have a spending problem. Taxes are too high for all income levels that actually pay income tax. With nearly half paying no income tax the burden on the rest of us is too high. Not only do those of us pay income tax rates that are too high, we pay state, county, city, and many more hidden or forgotten taxes. It is quite normal for many folks to pay in excess of half their income on various taxes. Paying more will only enable government to continue to grow which will further stifle the economy.

  • Ed

    As an infamous hotel baroness once said”taxes are for the little people.”

  • this is a federal law but to me a small business is a mom and pop store that only employs a handful of people . I worked in a company that had around 150 -200 people working for them and they are a multi million dollar company. So how can they concider this small business.

    Ending UNFUNDED Bush tax cuts – and AFGHAN WAR
    End SS tax cap and Heavily fine income Tax cheats .
    Arrest welfare /Wall St Welfare
    END loopholes & subsides for big oil & pharma
    Control health costs over time
    Fund not GUT education
    Thats our children’s future

  • If Business is sitting on over two trillion dollars, how will cutting taxes on the rich help the employment picture? All that will do is increase the two trillion dollars to three or four trillion dollars, and will not add more jobs. WAKE UP PEOPLE!!! The wealthy pass on vast fortunes, so the wealth is still retained by the same families for generations. The working class need business for the jobs they provide and the goods and services they provide. The wealthy are less and less dependent on American labor for the wealth creation they crave. They have the luxury of outsourcing the need for labor to cheaper markets, and increasing automation for a fraction of the cost of American labor. THE ONLY WAY LABOR WILL BENEFIT IS IF THE CORPORATIONS ARE GIVEN MORE INCENTIVES TO PAY A DECENT WAGE FOR THE AMERICAN LABOR THAT THEY ARE SO DESPERATELY TRYING TO DESTROY. INCENTIVES ARE NEEDED TO HIRE AND TRAIN WORKERS AT ALL LEVELS, NOT JUST THE UPPER MANAGEMENT. And tax the profits of corporations at a higher rate for outsourced jobs. Automation will occur no matter what is done with taxes. Learn to be more than just a manual “machine” for the corporations, and you can be worth more to the corporations than any machine.

  • If I had all romneys money i sire woulnt be afraid to pay the income tax he wants his cake and eat it to

  • geewilly

    It’s time for EVERYONE to suck it up, pay more taxes, and provide our kids and grandchildren a debt free future…. Paul Ryan voted for every dollar borrowed by Bush and now he whines about our debt…. What part of “temporary” tax break don’t the rich get??? Maybe we need to send them a dictionary so they can read the definition and understand it is time for our tax rate to “reset”…. we are Americans and we will be just fine!

  • ObozoMustGo

    Onyl the most hardcore leftist freaks and useful idiots think raising taxes will be used to buy down debt. You must be a moron of magnanimous proportion to buy that lie.

    I’d be willing to make all of you leftist freaks a deal. I’ll take the Clinton tax rates back IF we can have the Clinton spending amounts back. That’s a fair trade. Any of you leftist freaks in for this deal?

    Have a nice day!

    “The problem is not that people are taxed too little, the problem is that government spends too much.” – Ronald Reagan

    • highpckts

      Ignoring as usual!!

  • Who pays the topc income tax rate? Not Mitt Romney, he pays 13% when he is unable to hide his earnings in tax shelters overseas and in Swiss bank accounts so that he does not pay anything.