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The President today made a slight change in his rhetoric on the tax cut issue, and I think it's an important one.  When we talk about the so-called "middle class" tax cuts, we are not talking about taxes that benefit the middle-class.  These are tax cuts that will let EVERY American taxpayer keep more of the first $250K of their income.

Now obviously, at some point, the higher rates on income after $250K will cost more than what they save on the first $250K.  But follow me after the jump to see just how high the income chart you have to go to lose money on this deal.

I think this is a really important talking point when you're getting into Facebook wars with your asshole room mate from college or your Uncle with the NRA bumper stickers.

The mantra of the GOP is that the Democrats are paying "class warfare" by only rolling back tax breaks on the top income brackets.  But that's simply not true.  Even people who earn more than $250K per year will benefit from the Obama Tax Cuts because we all pay progressive tax rates.  So regardless of your total income, you will pay less money on the first $250K that you earn.

To show how many people will get a net benefit on this deal, I crunched the numbers for a young major league baseball player.  I went to this hand-dandy "Bush" tax cut calculator and entered the (estimated) numbers for Francisco Cervelli, the back up catcher on the Yankees.  His baseball salary is approximately $411K.  I assumed that he is married, with one minor child.  I took 7% out for New York State income tax.  And made reasonable estimates for his property taxes, dividend income and mortgage deduction.  I assumed his (fictional) wife did not earn any taxable income for sake of simplicity.

If Congress lets the "Bush" tax cuts expire, he will owe $117,680.  
If Congress instead renews them all, he will owe $109,812.  
If Congress instead implements the "Obama" tax cuts, he will owe $111,029.

So the Obama tax cuts will save Franciso Cervelli nearly $1,200. Despite the fact that he will pay slightly higher taxes on his income after $250K.  
So even some big league ball players will come out ahead on this deal.

I also ran the numbers on a person who makes $250K before taxes.  Again, I made this person married with one child and ball parked the normal deductions.  This time I made the person a renter, so there was no deduction at all for Mortgage Interest.

If Congress lets the "Bush" tax cuts expire, he will owe $57,846.  
If Congress instead renews them all, he will owe $53,462.  
If Congress instead implements the "Obama" tax cuts, he will owe $53,462.

So someone at the very top of the Obama-only tax brackets will save the same $4,384 under the Obama tax cuts that he would save if all of the Bush tax cuts were extended.  

Somewhere beyond 411K, the wealthiest among us will pay somewhat more for the very comfortable lifestyles they live in this country.  They can afford it.  

Here is the tool I used:
"Bush" Tax Calculator

Originally posted to Spider Stumbled on Wed Sep 15, 2010 at 05:55 PM PDT.

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Comment Preferences

  •  Tip Jar (11+ / 0-)

    "They don't think it be like it is, but it do. " Oscar Gamble, circa 1980

    by Spider Stumbled on Wed Sep 15, 2010 at 05:55:49 PM PDT

  •  Spiker - a question (0+ / 0-)

    Are the Obama "tax cuts" really a new set of marginal rates that are lower than the existing schedule or is the Obama proposal to keep the existing tax rates that would expire at the end of the year? I may not understand he proposal clearly, but if it's keeping the existing rates it's not a "cut".

    "let's talk about that"

    by VClib on Wed Sep 15, 2010 at 06:08:31 PM PDT

    •  A typo - Spider a question? (0+ / 0-)

      "let's talk about that"

      by VClib on Wed Sep 15, 2010 at 06:09:18 PM PDT

      [ Parent ]

    •  It would restore the Bush tax rates (1+ / 0-)
      Recommended by:

      which would be lower than if nothing happened.

      "They don't think it be like it is, but it do. " Oscar Gamble, circa 1980

      by Spider Stumbled on Wed Sep 15, 2010 at 06:11:41 PM PDT

      [ Parent ]

    •  Yes it is a cut (0+ / 0-)

      George Bush and the Republicans set the higher rates for 2011. They are current law.

      Obama wants to cut them. As this diary points out, even those making over $250K will receive a cut with Obama's plan, over the rates George Bush and the Republicans set for 2011.

      This is all simple fact.

      •  When is a "tax cut" really a cut? (0+ / 0-)

        Oddball I think you are being really disingenous on this point. The GOP would have been happy to make the cuts permanent but could not get 60 votes in the Senate and had to pass the tax cut legislation through reconciliation, and therefore the rates have a ten year sunset. Keeping the rates static is not a cut. And under Obama's plan people making over $200,000 will see their tax liability rise, which I favor. However, there is no way to characterize an increase in taxes as a cut.

        "let's talk about that"

        by VClib on Wed Sep 15, 2010 at 10:14:37 PM PDT

        [ Parent ]

  •  Fact is, most people don't understand a rich (0+ / 0-)

    person's taxes, and it's not like Rush or Beck or other rich right wing pundits are going to TELL them, either.

    Some feel more comfortable with the certainty that comes from losing power and letting republicans stab them in the front. It's a failure of nerve.

    by Inland on Wed Sep 15, 2010 at 06:27:37 PM PDT

  •  If I understand this correctly, (0+ / 0-)

    there will be no change in the present tax percentage for those of us making less than $250K; those making more than that will get the credit for anything up to $250K, but will pay a higher rate (35% raised to 39%) for anything above that if the Obama plan is that right?  And this may add about $2.7 trillion to the national debt over 10 years?   If the total Bush tax cut is renewed, then it will add $3.9 trillion over 10 years.  It still would be better to not renew the tax cuts and not add to the national debt....but that would not set well with the "no more taxes"/" decrease the national debt" unrealistic public.  Thanks for the link to the neat calculator!

    "Those who make peaceful revolution impossible will make violent revolution inevitable." - JFK

    by moose67 on Wed Sep 15, 2010 at 06:55:38 PM PDT

    •  Well, I'd maintain the middle class tax cuts (0+ / 0-)

      But other than that policy issue which does not effect the numbers, your summary is correct.  And the Diarist outlined the numbers well.

      Republican Platform = Fear, Anger, and Hate. Oddly their God preached against the same.

      by TexDemAtty on Wed Sep 15, 2010 at 07:40:11 PM PDT

      [ Parent ]

  •  If that calculator is correct (0+ / 0-)

    the President's proposals do not increase taxes until one is making over a million.

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