Mitt Romney's tax increase on Northern Virginians

[Anonymous]

Ok, so Virginia is in play. And the GOP message is Obama will raise your taxes.

Then Romney comes along with this:

http://politicalticker.blogs.cnn.com/2012/10/03/romney-suggests-17000-cap-on-tax-deductions/

I've been doing back-of-the-envelope. All assumptions below are based on married filing jointly.

Say you have a HHI of $200,000. Mortgage interest and property taxes amount to $36,000 a year. You donate another $4,000 a year to taxes and deduct another $10,000 in state income taxes. That's $50,000 worth of federal deductions (assume for the moment that the AMT doesn't apply). That reduces your taxable income to $150,000, solidly in the 28% tax bracket. Your tax deductions save you $14,000 in taxes.

Now, Romney's going to disallow $33,000 of your tax deductions. The represents a tax increase of $9,240 before you take into account the 20% reduction in the rates he proposes.

The 20% cut in rates saves you $5,417.46 in taxes on your first $139,350 of taxable income.

Your next $43,650 of income will now be taxed at Romney's new marginal rate of 22.4% (instead of 28%). That's $9,777 in tax compared to $12,222, a difference of $2,445.

Which means if I'm calculating this correctly, Romney just proposed a tax increase worth $1,378 on this kind of taxpayer ($9,240 tax increase due to the limited deduction minus the $5,417 + $2,445 in savings due to cuts in the rates).

Not exactly sure how this compares to Obama. And, there are other factors to consider (AMT patches, etc.)

[Anonymous]

Crickets

[Anonymous]

So all Northern Virginians make $200K+ HHI? I don't. Average HHI in Fairfax and Loudoun, the richest counties in America, is about $115K.

Shouldn't people who make over $200K/year pay their "fair share?" That's what Obama thinks.

And the news bite said that Romney was 1) giving a hypothetical, and 2) he would concomitantly lower the tax rates for the middle class, such that middle class people would owe less tax.

[Anonymous]

Anonymous wrote:So all Northern Virginians make $200K+ HHI? I don't. Average HHI in Fairfax and Loudoun, the richest counties in America, is about $115K.

Shouldn't people who make over $200K/year pay their "fair share?" That's what Obama thinks.

And the news bite said that Romney was 1) giving a hypothetical, and 2) he would concomitantly lower the tax rates for the middle class, such that middle class people would owe less tax.

What you say is true. What surprised me is that under some scenarios, Romney would tax people who live in this are MORE than Obama.

Take your $115,000 average income example. Under Obama, they pay nothing more since his policies wouldn't start to charge them more until they earn another hundred grand or so.

But a $17,000 limit on itemized deductions as Romney proposes (that's not a hypothetical -- it's an actualy number he's put out), could have the net effect of higher taxes, even with a rate reduction.

And, yes, it's quite common for people in NOVA to earn $200,000. That's two working spouses in senior management. Hardly unheard of.

[Anonymous]

Anonymous wrote:Ok, so Virginia is in play. And the GOP message is Obama will raise your taxes.

Then Romney comes along with this:

http://politicalticker.blogs.cnn.com/2012/10/03/romney-suggests-17000-cap-on-tax-deductions/

I've been doing back-of-the-envelope. All assumptions below are based on married filing jointly.

Say you have a HHI of $200,000. Mortgage interest and property taxes amount to $36,000 a year. You donate another $4,000 a year to taxes and deduct another $10,000 in state income taxes. That's $50,000 worth of federal deductions (assume for the moment that the AMT doesn't apply). That reduces your taxable income to $150,000, solidly in the 28% tax bracket. Your tax deductions save you $14,000 in taxes.

Now, Romney's going to disallow $33,000 of your tax deductions. The represents a tax increase of $9,240 before you take into account the 20% reduction in the rates he proposes.

The 20% cut in rates saves you $5,417.46 in taxes on your first $139,350 of taxable income.

Your next $43,650 of income will now be taxed at Romney's new marginal rate of 22.4% (instead of 28%). That's $9,777 in tax compared to $12,222, a difference of $2,445.

Which means if I'm calculating this correctly, Romney just proposed a tax increase worth $1,378 on this kind of taxpayer ($9,240 tax increase due to the limited deduction minus the $5,417 + $2,445 in savings due to cuts in the rates).

Not exactly sure how this compares to Obama. And, there are other factors to consider (AMT patches, etc.)

Not sure that you're an Obama plant try to help swing a battleground state, but pretty sure.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ok, so Virginia is in play. And the GOP message is Obama will raise your taxes.

Then Romney comes along with this:

http://politicalticker.blogs.cnn.com/2012/10/03/romney-suggests-17000-cap-on-tax-deductions/

I've been doing back-of-the-envelope. All assumptions below are based on married filing jointly.

Say you have a HHI of $200,000. Mortgage interest and property taxes amount to $36,000 a year. You donate another $4,000 a year to taxes and deduct another $10,000 in state income taxes. That's $50,000 worth of federal deductions (assume for the moment that the AMT doesn't apply). That reduces your taxable income to $150,000, solidly in the 28% tax bracket. Your tax deductions save you $14,000 in taxes.

Now, Romney's going to disallow $33,000 of your tax deductions. The represents a tax increase of $9,240 before you take into account the 20% reduction in the rates he proposes.

The 20% cut in rates saves you $5,417.46 in taxes on your first $139,350 of taxable income.

Your next $43,650 of income will now be taxed at Romney's new marginal rate of 22.4% (instead of 28%). That's $9,777 in tax compared to $12,222, a difference of $2,445.

Which means if I'm calculating this correctly, Romney just proposed a tax increase worth $1,378 on this kind of taxpayer ($9,240 tax increase due to the limited deduction minus the $5,417 + $2,445 in savings due to cuts in the rates).

Not exactly sure how this compares to Obama. And, there are other factors to consider (AMT patches, etc.)

Not sure that you're an Obama plant try to help swing a battleground state, but pretty sure.

That's funny. I'm just a tax nerd in Arlington. "Obama plant." You slay me.

[Anonymous]

Yeah, what pisses me off about Romney's plan is the disallowing of deductions. It costs SO EFFING MUCH to buy a house these days, and as a young person (early 30s) who finally, FINALLY saved up enough to buy a house, now I'm not going to be able to deduct mortgage interest anymore if it's above a certain amount? F*ck that.

Look, I know I'm not getting social security. I know I'm not getting a pension. But f*ck Romney and his offshore bank accounts if he thinks he's going to milk more money out of this particular tax payer. Thankfully since DH and I live in Arlington, our votes will hopefully help keep this rich clown out of office.

[Anonymous]

Anonymous wrote:Yeah, what pisses me off about Romney's plan is the disallowing of deductions. It costs SO EFFING MUCH to buy a house these days, and as a young person (early 30s) who finally, FINALLY saved up enough to buy a house, now I'm not going to be able to deduct mortgage interest anymore if it's above a certain amount? F*ck that.

Look, I know I'm not getting social security. I know I'm not getting a pension. But f*ck Romney and his offshore bank accounts if he thinks he's going to milk more money out of this particular tax payer. Thankfully since DH and I live in Arlington, our votes will hopefully help keep this rich clown out of office.

So being that you're in your early 30's, married, and are likely to have a kid in the next five years....you're convinced you're on the cusp of making more than 250K? Really? Cause I think not, which means you're HIGHLY likely to not see a tax increase, as Gov Romney has said probably just under a dozen times last night.

For your own safety, I beg of you to please explore the tax increases going into effect as a result of the ACA.

Idiot. Go back to the RHONJ thread.