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View Diary: Pete Peterson Group: "$250k a Year Is Not Easy Street" (317 comments)

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  •  Article missing the point on taxes (again) (27+ / 0-)

    President Obama's proposed taxes rates for the wealthy start at income ABOVE 250k.  So the family with 250k in income gets ......

    a tax cut.

    At some point above 250k/yr, the increased tax rate on marginal income is greater than that tax cut on lesser income, so a small tax increase would start to manifest somewhere around 275k in income.

    It's only millionaires (in the income sense, >$1M per year) who pay notably more in income tax under any Obama administation proposal.

    •  THANK YOU (5+ / 0-)

      The first 250k is just like everybody else - same tax rates, same breaks.

      It's only the amount ABOVE that that would get zapped with higher taxes.

      So if you make 260k, only 10k get taxed at the higher rate. If that higher rate is, say, 50%, you get 5k of it.

      But the first 250k is just like it was before.

      •  But, the additional taxes are even less than that! (4+ / 0-)

        Because:

        (a) Everybody gets the tax cuts that are going across the board, even those earning > 250k.

        (b) The marginal amount in play is 4.6% (39.6% compared to 35%, in effect restoring Clinton top rates),  so if you make 260k, the additional taxes (even ignoring (a), your net tax increase under President Obama's tax proposal is 4.6% of 10k = $460.  If you make 300k, you pay an additional 4.6% of 50k = $2,300.

        Can someone bringing in $300k afford an extra $2.3k in taxes?  I think so!  Looks like it could be done by cutting (gasp!) 46% of the cleaning expenses.  I don't know about anyone else but we both work and we both clean the house.  Last year I got a cleaning service to come in, once, as a present for my wife.  The $150 felt like an indulgence, I guess I didn't know that a family where both parents work should be spending $5k a year.

        •  And the proposals for tax hikes ... (3+ / 0-)
          Recommended by:
          James Wells, tardis10, PsychoSavannah

          ... involve TAXABLE income, not gross income. So couples who earn $250K a year would not be affected at all. The increase would apply only to someone who has more than $250K left AFTER deductions, exemptions, etc. You'd have to earn a good bit more than $250K a year to have taxable income of $250K a year. And, of course, as has been pointed out, the increase would only apply to the portion of income over the threshold, not the entire $250K+ amount.

          So it's really misleading to profile people who are making less than the threshold at which proposed tax increases would kick in and, since the proposed increase is not all that great to begin with, and you only pay the higher rate on the portion that exceeds $250K, you'd have to make a lot more than $250K in taxable income to really feel any pain, which is also misleading not to point out.  An extra dollar of income over $250K is not going to raise your taxes by more than a few cents.

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