It Ain't All That Much Money

[babylonsister]

http://digbysblog.blogspot.com/2010/09/it-aint-all-that-much-money.html

Sunday, September 12, 2010

It Ain't All That Much Money
by digby


As we head into the debate about the Bush tax cuts expiring, with well-heeled TV celebrities like Jack Cafferty again declaring that "200k ain't all that much money" it's a good idea to check out how these tax cuts expiring on schedule will play out in real dollars compared to what they were when Bush pushed them through. The NY Times did that a few months back and it's instructive:

Given the progressive nature of the federal income tax system, in which tax rates increase with income, even the richest households would continue to pay the four lower rates on up to the first $250,000 of their income, under the approach being pushed by Mr. Obama and Democratic leaders in Congress.

The president has vowed to extend the tax cuts for individuals with less than $200,000 in annual taxable income and couples with less than $250,000 — about 98 percent of American households. About 315,000 households report adjusted gross income of $1 million or more.

Taxpayers with income of more than $1 million for 2011 would still receive on average a tax cut of about $6,300 compared with what they would have paid under rates in effect until 2001, according to the analysis, which was prepared by the Joint Committee on Taxation at the request of the Democratic majority on the House Ways and Means Committee.

That compares, however, with the roughly $100,000 average tax cut that households with more than $1 million in income would receive under current rates.

Filers with taxable income of $500,000 to $1 million would still get on average a tax cut of $6,700 compared with pre-2001 rates, according to the data from the tax analysts. But that compares with roughly $17,500 if the top Bush tax rates were maintained.

If the president gets his way, in 2011 the top two income tax rates — now 33 percent and 35 percent — would revert to the levels before the Bush administration, 36 percent and 39.6 percent, respectively. But the four lower rates would remain 10 percent, 15 percent, 25 percent and 28 percent. For some taxpayers earning up to $250,000, the top marginal rate would remain 33 percent.

These wealthy people will still be paying less than they did during the go-go years of the 90s so it's a little bit disingenuous to say that the economy will crumble if they are forced to go back to it. I know they all feel that they are above paying taxes, but it's the patriotic thing to do.

[unblock]

1. $200k is not a whole lot of money if it's taxable income - but a 4.6% hike on the rich is?

i certainly agree that there's no great divide between those who make less than vs. more than $200k. but it's not like the difference in proposed tax rates have much of a big difference.

you have to have an adjusted gross income of something north of $4.5 MILLION before the tax difference is $200k in your total tax bill.

yet the rich and their spokespeople in the media would have you believe that that 4.6% difference is the very difference in making or breaking this entire economy. what rubbish! rich people are not going to create a brazillion jobs with a top tax rate of 35% and no jobs with a top tax rate of 39.6%. there's nothing close to any evidence to support the crazy lines these people spout. in fact, there are VERY few business decisions that will be affected by the difference in top tax rates, other than some timing differences -- people will try to realize income BEFORE the tax rates go up rather than after, if it's within their power to shift it -- and that's an argument FOR hiking taxes!

[quaker bill]

2. $200K "is not alot of money"

This may be true, but 98 percent of us would likely enjoy trying it out for a year or two to see how it feels....

[babylonsister]

3. Add me to that list. I can squirrel is away for

my retirement. To me, that is a lot of dough.

[unblock]

4. what i meant was

the caffery quote about $200k being not a whole lot of money if that's 100% of your taxable income is one part of his argument; the other part is that, $200k *is* a lot of money -- enough to make some huge difference in the economy -- if it's the increase in total taxes owed due to the slightly higher tax rates on the top brackets.

if you buy his argument that $200k is not a whole lot of money when it's ALL your taxable income, then you should follow that through and also buy the argument that if you make over $4.5 million dollars in taxable income, the extra $200k you would owe in total income taxes due to the top rate going from 35% to 39.6% IS ALSO NOT A WHOLE LOT OF MONEY so QUIT COMPLAINING!

[indepat]

5. $200k, while not a lot of money, is quite a few multiples higher than the federally-mandated

minimum wage and almost twice the maximum earned income subject to social security payroll taxes. ;)