This is something I've talked about before, but with Obama's continuous harping that "95%" of Americans will not a dime increase in taxes, and his recycled stump speech line that if you make less than $250,000 a year your taxes will not go up, I think it's important to bring up again.
Via an article on ABC.com entitled "Upper-Income Tax Taxpayers Look for Ways to Sidestep Obama Tax-Hike Plan" comes stories of several professionals (lawyers, dentists, entrepreneurs) who claim that they are going to reduce their income to under $250,000 mark so as to avoid paying extra taxes.
Many liberals tend to dismiss such stories, claiming that nobody actually would do that. A dollar more is a dollar more, right, and wouldn't you want one more dollar (even if you have to also pay a dollar to the government)? While it's true that if you make $500,000 you're unlikely to reduce your income in half in order to fall into a lower tax bracket, but for those close to $250,000, higher taxes could indeed motivate that dentist to take an extra day off per week (my dentist already only works four days a week) or that lawyer to turn down that extra client. While this is good for those that want more leisure it's bad for the economy as a whole. And it could backfire on Obama's plans to raise as much revenue as he thinks he'll raise as he'll be taxing fewer and fewer people.
I don't know why this issue bothers me so much. I'm not even close to the $250,000 mark and in all honesty I don't think I'll ever make that much per year, but I just don't think having only 5% of people pay for stuff that everyone will benefit from seems fair. Obama trots out the line of 95% not paying a cent more as a matter of justice, but I just don't see that. Obviously the rich can pay more taxes, but they already DO pay more taxes (on both a total number and as a percentage of income). I'd like to see Obama justify these "necessary" programs by asking everyone to chip in. It sure makes it easier to go along with a huge stimulus bill when you know you won't have to pay for any of it.
And, on a side note, I love the poll in the middle of the first page of the article that asks, "Is it fair to reduce high salaries in order to sidestep Obama's tax proposal?" As if making lots of money (and by extension giving ever larger portions of that money to the government) is somehow a person's moral obligation. Unfortuneately that's exactly how many on the left view it.
HT: Cato Institute
Monday, March 02, 2009
Incentives 101
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We're rethinking our current situation since we're around $300,000 a year and already pay:
ReplyDelete$71,056 in federal
$6,621 in social security
$4,350 in medicare
$15,000 in state
Taking home $202,973, a very respectable take home by any measure.
With the proposed tax changes, we'll now pay $87,552 in federal and if all else remains the same, that means we'll have take home reduced to $187,447....or take home $15526 less after the proposed changes take effect...and 8% reduction in our take home, or $1,294 less each month.
How many out there are truly afford to take an 8% cut in their household budget without cutting something out?
For us the cuts are childcare (loss of a job for someone else), the housekeeper (loss of a job for someone else), and reducing our other service-based expenses that we can do ourselves (ie. cleaning the gutters on the house in the spring & fall - we can do that; landscaping - we can do that; car washes - we can do that; etc. - and each of these reduce the income of others in service sector jobs).
Heck, maybe I too will willingly unemploy myself to reduce our taxable income to $175,000 instead of $300,000 to afford the cuts we're planning to make by reducing and eliminating service-based folks we spend money on now?