ABC News recently published this story:
Upper-Income Taxpayers Look for Ways to Sidestep Obama Tax-Hike Plan
It was meant as a scary tale of socialism and class warfare, where the heroes are the intrepid wealth earners of America victimized by an unscrupulous and greedy government. "We only want to hoard our wealth in peace!" is their cry.
The original article, from what I gather, implied that the increased tax rate would apply to the entire salary of anyone making over $250,000. If that were true, someone earning $251,000 would take home less than a person earning $250,000. But that isn't true. Our income tax is progressive, and here's what that means: earners only pay the higher tax rate on the part of their salary over the cut off. In this case, $1.
The article highlights Dr. Sharon Poczatek, a dentist in Boulder, Colorado. Poczatek makes $320,000 a year, and wants to reduce her earnings to under $250,000 to aviod the tax increase. The moral of the story is that she and many like her will be less productive as a result of the new tax policy. People will work less hours. Oh my.
Here's the rough calculations on Dr. Poczatek's plan to avoid socialism:
The marginal rate over $250,000 is proposed to go from 35% to 39%, which she will pay on $70,000 of her salary.
At the current rate she pays $24,500 on that $70,000 and keeps $45,500.
At 39% she will pay $27,300 on that $70,000 and keeps $42,700.
So Dr. Poczatek is willing to give up $42,000 in order to save paying an extra $2,800 in taxes?
Fuck you nose, where's my knife?
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ps: Someone at ABC must have a few cells bumping together up there, because the article now has this discaimer:
Editor's Note: Yesterday ABC News published a version of this story which some readers felt did not provide a comprehensive enough analysis of Obama's tax code for those families making $250k or more. ABCNews.com has heard those concerns and after review has decided to post an updated version of the story below
pps: I found this link last night on Redstate. Apparently Malkin picked up the article and it quickly spread through the wingnut-o-sphere. I posted my calculations in the comments. I can no longer access Redstate.com. Oh, well, I guess I'll have to find another way to get my laughs.