You know Republicans are intellectually confused when they send out press releases defending a top marginal income-tax rate of nearly 50%. Yet that's what they were up to this weekend as they tried to justify their bubble bracket tax rate of 45.6% after our criticism on Saturday.
We called it a stealth tax rate because it's buried in the fine print of the Ways and Means proposal. It also isn't part of the tax simplification story Republicans are selling by publicly claiming the House reform shrinks the individual code to four rates from seven. But caught out by our reporting, they are now denying that the fifth rate is stealthy while defending it as good policy.
The 45.6% is a bubble rate because it applies to tax-filing couples who make between $1.2 million and $1.6 million (above $1 million for single filers).
The surcharge is intended to claw back any benefit these filers get from the new 12% income bracket that applies to income of less than $90,000 for couples ($45,000 for single filers).
Republicans apparently think it's unfair for people to pay the same rate on the same dollar of income. So their surcharge applies the 39.6% rate to those first dollars of income for those more affluent taxpayers, which adds about six-percentage-points to the top rate and gets to the 45.6% bubble rate.
Add that to the 3.8% ObamaCare surcharge that Republicans are keeping as part of tax reform, and these taxpayers would now have a top marginal rate of 49.4%. Add state and local taxes, which would no longer be deductible against federal taxes (a policy we support), and these mostly Republican voters would in many states pay a marginal rate (on the next dollar of income) close to 60% and an effective rate (total share of income) higher than they do now.
Keep in mind this is Republican tax policy.
"The 45.6% is a bubble rate because it applies to tax-filing couples who make between $1.2 million and $1.6 million (above $1 million for single filers)."
In other words....the poor.
Billionaires who plan on saving hundreds of millions.
This is all noise...if you really want to tax the Wealthy, get rid of the carried interest provisions in the tax code, a WSJ piece (that I can't easily find, maybe the Tri-lateral Commission deleted it) said that elimination of that provision would raise 2.5 trillion over 10 years.
Right now Rep. Kevin Brady, the chair of the House Ways and Means (the tax-writing panel) has said that he would support raising carried interest timeframes from one to two years, but that is window dressing since most private equity and Hedge Funds have a average 30 month hold window.
I guarantee you that these finance people have made it very clear to their pet Congresspeople and Senators that their financial support will dry up if they mess with carried interest.
What they aren't telling us is the real motive for these tax cuts. Bankrupting the federal government so they can slash SS, Medicare, Medicaid and all other social programs. They'll get guys like JeffJ to come and tell us more about unfunded liabilities which, in truth, we have funded out of deduction on our paychecks for decades. When the guillotines are rolled out I don't want to hear any whining from the beneficiaries from tax cuts like these.
"What they aren't telling us is the real motive for these tax cuts. Bankrupting the federal government so they can slash SS, Medicare, Medicaid and all other social programs. "
They'll get guys like JeffJ to come and tell us more about unfunded liabilities which, in truth, we have funded out of deduction on our paychecks for decades.
How about CNBC, do you trust them? Social Security has a looming $11 trillion shortfall
From ROC Forbes horsesh*t.
"Demographers tell us that children born today can expect to live to 100, and the child has already been born who will live to 200."
In other words....the poor.
#2 | Posted by danni
I hope the rich can somehow muddle through.
#3 | Posted by SheepleSchism
You two need to have a confab and decide whether someone who makes more than 1.2 million per annum is rich or poor.
Much better to tax the sick, poor and disabled. Thanks for pointing that out WSJ.
if you really want to tax the Wealthy, get rid of the carried interest provisions in the tax code,
You fail to see who is in charge and who they are kneeling and bobbing in front of.
This GOP tax shaft plan has been written by the ultra rich who told the GOP house that unless they eliminate the estate tax and lower their "burden" that they would cut them off from the payoff machine.
So the GOP throws a few small bones (very very small) for the middle class that expire in five years while repealing the estate tax and cutting corporate rates PERMANENTLY. By 2023 the middle class will be paying more than they do now while adding $1.5 TRILLION to the debt that they will use to justify cutting social security and medicare. Keep voting GOP Cleetus they are working for you.
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