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View Diary: The 2008 delusion we should not repeat in 2012 (155 comments)

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  •  In practice the 39.6% starts even higher (2+ / 0-)
    Recommended by:
    NWTerriD, howd

    Another point that is often overlooked are deductions: state, local, & property taxes; mortgage interest; 401k & IRA contributions, as well as Health Savings Accounts; & lastly dependents. And then there are charitable deductions.

    For example, a well-off person could $9000 in mortgage interest, $4000 in property taxes, $5000 in retirement savings & another $5000 in an HSA, then assuming a 10% state income tax (that's Oregon's rate, which I've been told is the highest in the US) there's another $25,000 deduction -- all of which brings the cutoff to almost $300,000, if not higher.

    Which means for someone making half a million in income, the new rate doesn't mean they'll be paying $11,500 more, but at most $9,200. Sorry, but I can't get too outraged about the amount; to someone making that much money she/he is complaining about a rounding error.

    •  Effective Total Taxes for Top 20% is 30% (1+ / 0-)
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      llywrch

      The real bottom line on taxes is the total effective taxes which includes federal, state, local, sales, property, etc.  Citizen for Tax Justice published a white paper on the break down by income quintile.  The paper reports the following effective tax rates:

      Top 1%  had a 30.0% effective rate
      Next 4% had a 31.3% effective rate
      Next 5% had a 31.1% effective rate
      Next 10% had a 30.0% effective rate
      Next 20% had a 28.5% effective rate
      Middle 20% had a 25.5% effective rate
      Next 20% had a 20.7% effective rate
      Bottom 20% had a 16.2% effective rate

      As you see the effective tax rate is fairly flat for the top 60% and gradually goes down to 16.2% for the poorest people.  In other words the richest only pay 14% higher tax rate that the poorest in this country.  

      Poor man wants to be rich. Rich man wants to king. And the king ain't satisifed until he rules everything. B.Springsteen

      by howd on Mon Nov 12, 2012 at 04:45:26 PM PST

      [ Parent ]

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