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Why is the marginal rate set at $250,000? A hardworking small business owner with a professional spouse could set their income goals to that amount. Small and medium sized businesses collectively are the nation's largest employer. They come out in droves against raising the marginal rate because it would drastically reduce the income of upper management and individual owners. Why not raise it beyond the reasonable expectations of the upper middle class?

Through observation I have noticed that Republicans are generally very hard working. I am an artist and subsidize my income working temp jobs, so I have worked at the bottom of a large variety of companies. The business owners I work for are mostly guys who work hard to maintain their employees, whom they regard as family, usually. They believe that they should be rewarded with a big house and a fancy car and a trip to the Bahamas one week a year. A modest request for happily creating economic security for the nation.

A successful shop owner can make around $250,000 a year. In a very good year they can make twice that.

When they hit the marginal rate, they turn on Fox News. They put Rush Limbaugh on the shop radio. When employees ask for raises, they blame the president. They say taxes are killing them. Maybe they are right. They are good people that feel shafted. I can't feel anything but empathy. Too many decide it's not worth it and either sell out to the competition or just auction off the shop equipment. Everyone of the employees goes on unemployment, then to poverty.

Raise marginal rate to 1 million dollars!!! Raise the rate over 1 million to 65 percent and cut the rate under. Make the marginal tax rate a millionaires tax. That would make even the reddest of my former bosses vote blue. That same boss might even hire a few more full time employees and temps. Then I get to eat better, you too.

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Comment Preferences

  •  I agree w/ the sentiment here: I know a number (0+ / 0-)

    of GOPers that work their faces off for their small businesses, and in a good year they may come close to the top bracket.  

    That said, our tax policy should be rational, and not be based on the wants of people that are doing pretty fucking well for themselves.  OTOH, it should hardly be a surprise that we adopt a rational tax policy at the expense of support from the small business community (who typically do vote GOP in droves, IIRC)

  •  there are way more people... (4+ / 0-)

    in the lower brackets. So I say keep taxing the people making the money and use it to help the ones in the lower brackets and we can have a shit ton of blue votes from those that make between 10k and 100k.

    Only when all hope is lost does shit get really funny.

    by jbou on Sun Jun 05, 2011 at 10:56:28 AM PDT

    •  You can like it or not, but people in lower (3+ / 0-)
      Recommended by:
      coffeetalk, nextstep, AnnieR

      brackets will vote against higher taxes for the rich because they're not sure they think higher taxes are ethical.  We seem the same dynamic w/ the estate tax: people that will never be hit by it just don't think it's fair, full stop.  If that's the case, higher tax rates on the rich won't be the golden ticket to political dominance that it's often portrayed to be.

      •  it's all in the marketing (4+ / 0-)
        Recommended by:
        janmtairy, allergywoman, tardis10, AnnieR

        People, when asked in polls, always say raise taxes on the rich. If we had raised taxes on the rich and used the money to stimulate demand in our economy those shop owners you care so much about would have customers buying their goods or services.

        Only when all hope is lost does shit get really funny.

        by jbou on Sun Jun 05, 2011 at 11:06:03 AM PDT

        [ Parent ]

      •  Especially when you are talking about (3+ / 0-)
        Recommended by:
        johnny wurster, nextstep, VClib

        earned income.  My dad's heart doctor makes, I'm sure, a very very very good living, well above that $250,000 threshold.  He's also invested a whole lot into college, medical school, etc., and works very very very long hours.  I think that the average person who works for a living thinks he should be paying a higher percentage of his income in taxes  than lower income households,  but when you get to a situation where federal and state income taxes alone (not including SS and medicare) take around 50% of earned income (back up to the 39.6% plus state income taxes, I think that many people think that's about the upper end of taxation of earned income.  Most people think you ought to be able to keep half of what you work for.  

        •  I'm not quite sure... (4+ / 0-)
          Recommended by:
          RainyDay, allergywoman, marykk, sewaneepat

          That you understand how Marginal Tax Rates work.

          Even if your father's Cardiologist is making $400K a year, his effective income tax rate is still pretty far from being 39.6%.

          •  I understand marginal rates very well. (1+ / 0-)
            Recommended by:
            VClib

            And effective tax rates also.

            The Clinton tax rates are the highest effective federal individual income tax rates EVER on this group. See the second chart on that link.  Ever.  (Remember, Eisenhower top marginal rates started on incomes that equate to about $2.5 million in today's dollars.)

            What that marginal rate means for someone who works, say, 2500 hours a year to earn the income is this.  At some point (maybe 2000 hours, or 2200 hours, depending on where the marginal rates state and the income per hour) is that working gives you diminishing returns and doesn't play a role in making a difference for the person or his/her family.  At some point, a doctor would rather take the extra 300 hours for his/her family than work for diminishing returns personally.  

            And, frankly, I think that most people would agree that the doctor should keep at least half of what he is working for in those last 300 hours.  

            I think that a combined marginal rate of 50% (federal and state income taxes, not necessarily counting Medicare), i.e., the Clinton rates, is about the limit of fairness on someone who works to earn money and whose income is directly dependent on how much they work.  

            •  if all the people living on unearned income (2+ / 0-)
              Recommended by:
              AnnieR, sewaneepat

              paid a fair rate, i.e., hedge fund managers and stock manipulators, the whole tax system would be less onerous.

              Likewise, those with large inheritances.

              Likewise, oil companies and GE and whatever else that get big subsidies or don't pay any taxes at all.

              It's hard as heck to know what's fair or to feel like you should pay your fair share, when so many have worked out deals that benefit a small but very wealthy sector.

              Even worse when some of those sectors are cheating the rest of us like crazy.

              "There's nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires." - President Obama

              by fhcec on Sun Jun 05, 2011 at 11:57:29 AM PDT

              [ Parent ]

            •  Now I know you don't understand marginal (0+ / 0-)

              rates. The "diminishing return" by raising the top rate back to the Clinton rate would be $30 less for each $1000 earned over $250,000 after all exemptions and deductions are taken. Hardly enough to keep them from working.

              You can't scare me, I'm sticking to the Union - Woody Guthrie

              by sewaneepat on Sun Jun 05, 2011 at 02:41:59 PM PDT

              [ Parent ]

              •  You are looking at an incremental increase (1+ / 0-)
                Recommended by:
                VClib

                instead of an overall rate.  Under your logic, as long as you increased the top marginal rate on household income only 3% at a time, there would never be a point at which an earner decides to forgo the extra hours to earn diminishing returns.  You could increase to 53%, then two years later to 55%, and so on, up to 80% or 90%, and each time say, "it's only 3% more.  Under your logic, people don't look at overall rates paid on the revenue from each additional hour of time spent working, just the incremental difference over last year.   Earners don't look at it that way.  At some point -- even if you increase only small increments at a time -- it becomes "not worth it" to put in an extra month's worth of hours.  

                Believe me, people at that level know exactly when, for example, the additional hours worked for additional money puts them into a higher marginal rate for those last hours worked.  

                Again, I'm not saying we've reached the point where the marginal income on the additional hours worked means returns so diminished that people lose the incentive to work those additional hours.  It's just that, at some point you do, even if you "only" go up 2% or 3% at a time.  And while I'm not an economist who has studied how tax policy affects behavior (there are plenty of those out there) I would guess that once you get north of 50% combined state and federal income taxes on those incremental hours, the incentive for working them lessens.  I certainly know it would for me.  (I'm a lawyer who earns by the hour worked.)  

                Tax policy DOES affect behavior, of course.  The (in this case) billion dollar question is when that kicks in.  It's probably at different levels for different people, so that's why economists can differ.  

                Again, for these reasons, I also think there's a sense of fairness once you get north of 50% in income taxes on an hour worked.  

                •  Let's look at it this way. (1+ / 0-)
                  Recommended by:
                  Kentucky DeanDemocrat

                  Let's say that someone makes $300,000 year and just takes the standard deduction and is married with two kids. This person also has no investment income. I'm making these assumptions so that we can use the smallest amount of income where it could possibly matter whether the marginal rate for  over $250,000 is 36% or 39%.

                  This person makes $25,000 per month. If he pays  50% of his income in taxes for the last month, he will take home $12,500 for December. If taking home $12,500 for that month is not worth it for him, perhaps he should stay home with his family. Do I have sympathy? No. You do know a lot of people work hard all year and take home less than $12,500 after their taxes.

                  You can't scare me, I'm sticking to the Union - Woody Guthrie

                  by sewaneepat on Sun Jun 05, 2011 at 03:47:20 PM PDT

                  [ Parent ]

  •  If someone is making $250K (4+ / 0-)
    Recommended by:
    janmtairy, cheerio2, allergywoman, marykk

    and that's after deductions and all business expenses --

    why shouldn't they pay a higher tax rate?

    The tax increase would be 4.6% -- but that is only for income that is above the $250,000. And that is after all allowable deductions.

    I know a lot of people making that much money work hard. But they can afford to pay the higher rate.

    Shop Liberally this holiday season at Kos Katalog

    by JamieG from Md on Sun Jun 05, 2011 at 11:05:41 AM PDT

  •  The $250,000 limit is household income (4+ / 0-)
    Recommended by:
    johnny wurster, nextstep, marykk, VClib

    not individual income.

    Two college educated working professionals in, say, their 40's or 50's can each make $150,000.  Yes, not all do, but (since I'm -- um -- "middle aged" myself) I know lots of CPA's, engineers, architects, "business majors," etc. who, after working 25 years, reach $150,00 a year.   I also know some non-college educated small business owners (body shops, mechanics, plumbers, etc.) who, after 25 years, get to $150,000 or more.  

    Yes, a $250,000 household income is very well off, comparatively speaking.  It's also, however, people who have invested a lot of money in a college education (or graduate school) and/or a small business to get there and who get up every day and work for a living.  

    While it's popular among some to talk about the evil, greedy rich, I don't think this $250,000 household income group fits that mold.  Schumer, I think, took the better road politically last go round by focusing on household incomes over $1 million.  The problem practically speaking is that there are not enough of those $1 million households to raise a lot of money.  (Sanders' proposed millionaire surtax raises only about $40 billion a year, I think).  It's more of a symbolic gesture, and a very very very small (relatively speaking) start.  It doesn't raise enough real money to make much of a difference.  

    •  Think this through (4+ / 0-)

      So let's say your hypothetical couple are pulling down $150K each for a grand total of $300K after all deductions (which, for a couple, means their gross income was probably closer to $330K).

      If the Marginal Income Tax Rates return to Clinton era levels, then this hypothetical couple will have to pay an extra $2300 in Income taxes.

      Are you really trying to argue that a family pulling down $300K+ can't afford an extra $2.3K in taxes a year?

      And this gets even more unbelievable when you consider that this hypothetical couple are bringing in about $100K worth of income that isn't subject the Payroll Taxes.  All in all, I would say they are doing just fine by the tax code.

      •  No, that's not what I'm saying at all. (1+ / 0-)
        Recommended by:
        VClib

        (And all earned income is subject to Medicare taxes, by the way.  SS taxes are capped because SS retirement benefits are capped to match.)

        What I'm saying is that for people who work every day to earn income, I think there is an upper limit.  That upper limit is probably the Clinton tax rates, which is the highest effective federal income tax rate ever on this group, if you look at CBO data.   The Clinton tax rates, plus state and local income taxes, will mean that, for some of the income this group earns, they keep about half of what they work to earn.   That means that, say, this couple keeps about half of what they work for the last month or two of the year.  

        I think that there's sense among the public that there's a fairness limit to income taxes on people whose income is tied to how much they work.  And I suspect that about 50% is it.  

        •  you keep saying the same thing over and over... (0+ / 0-)

          you "suspect" - evidence?

          can you address the numbers in the comments so we can see how your two arguments compare, in specifics?

          that would help a lot.

          thanks.

          "There's nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires." - President Obama

          by fhcec on Sun Jun 05, 2011 at 12:01:59 PM PDT

          [ Parent ]

  •  Please,many people work hard and contribute far (2+ / 0-)
    Recommended by:
    allergywoman, ItsaMathJoke

    more to the general welfare than someone who owns a business. Plenty of those hardworkers are under-compensated for their efforts. No yearly jaunts to the Bahamas for them. Rather they pay too much in regressive taxes and have few deductions. Years of stagnant/declining wages have left them with less and less.
    Those of us with >250K income,whether from a small business,salaries or investments,can and should pay more taxes.

    "George RR Martin is not your bitch" ~~ Neil Gaiman

    by tardis10 on Sun Jun 05, 2011 at 11:20:12 AM PDT

  •  oh crap (3+ / 0-)
    Recommended by:
    allergywoman, tardis10, sewaneepat

    it's a 3% raise on the amount OVER $250K. Owner's income, not business sales. Cry me a fuckin' river.

    A man, a plan, a canal, Panama

    by Karl Rover on Sun Jun 05, 2011 at 11:40:43 AM PDT

  •  an extra nickel in taxes on every dollar (8+ / 0-)

    over a quarter million you make in a year will not determine what size your house is or how fancy the car you drive. i am a small businessman, very small. i bust my ass every day & in a very good year i might net $60,000.00. how i'd love to pay the extra tax on an income of >$250,000. my experience is that the more people make, the less assbusting they are doing & most of the true assbusting is being done by several others making a fraction.
    my opinion is that they should roll back all the tax cuts for everybody to the prebush levels. there's your shared sacrifice. seems incredibly selfish to kick about paying a few thousand more when there are millions of people who'd love to be drawing a paycheck & paying taxes on it out there.
    taxes are the price we pay for civilization. you don't hear the wealthiest citizens - & if you are in the top 2%, you are wealthy - complaining about how mercedes or lexus are punishing them for being "achievers." they likewise don't feel discriminated against by what the 6,000 sq ft house in a gated community cost them. they brag about it. a decent society with first rate roads & schools costs money & the people who are benefiting the most from that society should be very willing to help finance it.

    Whatever action a great man performs, common men follow. And whatever standards he sets by exemplary acts, all the world pursues. The Gita 3.21

    by rasbobbo on Sun Jun 05, 2011 at 11:57:47 AM PDT

    •  how i'd love to pay the extra tax on an income of (1+ / 0-)
      Recommended by:
      rasbobbo

      "how i'd love to pay the extra tax on an income of >$250,000. "

       Exactly!

       the problem is we dont have nearly enough people making 60,000 a year. because if your making 12,000 a year you would be more than happy to pay tax rates for 60 thousand income. If your making income of 250 th really complaining about rates minus all the loopholes is bullshit,
       What is needed more than anything is a robust and fair American market not a global market, that is subsidized, untaxed, unregulated, and increasingly monopolized.

  •  I see your point but I don't think the tax (2+ / 0-)
    Recommended by:
    marykk, Kentucky DeanDemocrat

    policy is as onerous as you think.  

    They say taxes are killing them. Maybe they are right. They are good people that feel shafted. I can't feel anything but empathy. Too many decide it's not worth it and either sell out to the competition or just auction off the shop equipment. Everyone of the employees goes on unemployment, then to poverty.

    The tax policy shouldn't have that much of an impact on employee raises, hiring, etc. because all of that are business deductions.  The only $ that's taxed by income tax is what's left over for the owner after all business expenses have been deducted.  E.g. your business could be grossing $1 million every year, but if you pay your employees $900,000, your taxable income is only $100,000.  Are you saying that small business owners making >$250K taxable income per year would rather close up their profitable shop than pay 4% more on any taxable income above that?  

    That said, I see your point about the $250,000 being too low, and I would be fine with moving the post higher up to $1 million and over...but then that might lead to rates that are disproportionate enough to really anger the super wealthy.  

  •  Capital Gains/dividend rate: A much bigger issue (3+ / 0-)
    Recommended by:
    tardis10, marykk, sewaneepat

    I think the far bigger inequity is the 15% rate on "long term" capital gains (>1 year) and dividends.  These rates allow super-rich people to pay far lower effective income tax rates than regular wage earners.  In some cases the carried interest loophole allows them to pay nothing at all.

    I'd happily agree to a higher limit to the highest income tax rate (say 500k, which I think moots pretty much all the arguments about a 2-professional household income) in exchange for the basic tax equity of treating all income as, you know, income.

    •  Kathy Hochul won in NY-26 (0+ / 0-)

      while espousing raising taxes on incomes >500K,saying that was a reasonable and fair way to protect small business owners. I think this is an argument that would work for Dems in most districts.
      Your larger point,that all income should be taxed is absolutely correct. But unlikely to happen any time soon.

      "George RR Martin is not your bitch" ~~ Neil Gaiman

      by tardis10 on Sun Jun 05, 2011 at 12:25:28 PM PDT

      [ Parent ]

  •  A different take (0+ / 0-)

    I think taxes rates should be pegged to where you live. $250K for a two-income family in a place like NYC or DC buys much less than a two-income family in OK. I've always though there should be some sort of index on tax rates based on the cost of living in each taxpayer's metropolitan area.

  •  There is indeed something wrong with (1+ / 0-)
    Recommended by:
    Kentucky DeanDemocrat

    $250K being the top bracket cutoff, namely that there are people making 10, 100, 1000, even (rarely) 10,000 times that much. There's a much wider "dynamic range" of incomes at the high end than at the low end. We simply need more tax brackets at the high end; the idea that someone's marginal tax rate shouldn't change if he experiences a tenfold increase in income is simply inconsistent with progressive taxation.

    "We recommend, as a precautionary measure, that people with respiratory infections should be advised not to blow their vuvuzela in enclosed spaces and where there is a risk of infecting others."

    by ebohlman on Sun Jun 05, 2011 at 03:22:17 PM PDT

  •  My sampling group is not large enough.... (0+ / 0-)

    I am indebted to you all for the comments! As a red state dweller, I have met more Republican owners and managers. The shops I worked in were at the edge of small moving to medium.

    I guess this is another exercise in humanizing my "opponents". Most of the upper income folk I know got there by being extraordinary. It seems that any political movement worth it's salt should be appealing to them. We need their help!!!

    •  And yet business was better under the Clinton (1+ / 0-)
      Recommended by:
      Kentucky DeanDemocrat

      administration.

      Maybe these extraordinary people will understand that higher tax rates on the upper brackets result in things like:

      1. Better roads
      2. Better funding for education, leading to a more educated populace, which results in better employees
      3. A stronger, more secure middle class who are more likely to buy their products and services.

      Shop Liberally this holiday season at Kos Katalog

      by JamieG from Md on Sun Jun 05, 2011 at 05:00:12 PM PDT

      [ Parent ]

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