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Reply to "Biden tax proposals - MFJ"
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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I think the general argument here is it’s crazy that two 200k working professionals get lumped into the “rich” bucket. It’s beyond insane to me. That bucket is vilified. Why should a tech manager and a pilot be targeted for tax increases? Target the owner of the marketing company or the ceo of airline company. You all are nuts or just love bringing yourself up by trashing modest earners. Fine, raise the taxes but bring back the salt deduction. I think most around here wouldn’t bat an eye about that.. [/quote] It’s not insane. Those two are both in the top couple percent of earners. What would be insane is creating multiple tax brackets that in practice apply to less than one percent of the population.[/quote] How is that insane? It would raise taxes on all the wealthy, but at least is differentiates between a working class family and a hedge fund tycoon. Frankly it’s a win win [/quote] $400K HHI for a couple each making $200K is NOT a working class family. A working class family, even in DC is making $150-250K jointly. The median income of an individual in DC was around $75K in 2020. The median HHI in DC in 2020 was $95K. 80th percentile individual in DC was $140K in 2020, 80th percentile HHI in DC in 2020 was $210K 90th percentile individual in DC was $180K in 2020, 80th percentile HHI in DC in 2020 was $300K $200K individual in DC in 2020 was the 92nd percentile, $400K HHI in DC in 2020 was 95th percentile. Top 8% individual and top 5$ household is NOT working class. The working class averages around the median, maybe the 40th-60th or even 75th percentile. And for those who feel working class, I'm sorry, but owning a home in NW DC is by definition NOT working class. Owning a home in one of the most expensive portions of the metropolitan area is a luxury. It is by definition a luxury that is only available to the rich. The working class in DC who own their own homes live in the other quadrants of the city and they don't own in NW DC. If you choose to spend your rich income on housing in the more desirable parts of town, that is a luxury that true working class residents cannot afford. Besides, if you make $400+, you are only going to see the taxes raised on the portion that is above $400K. If you had an HHI of $450K, you would only see a tax increase on the top $50K of your income. Even if there was a 3% increase, you would only see an increase annually of $1500. If you think that paying an additional $1500 on an income of $450K is so onerous, then you are even more out of town with reality than most people think of the truly wealthy. Is the difference between say $150K and $151,500 in taxes going to seem that big to you?[/quote] The tax increases being proposed are quite a bit bigger than this. Biden is saying that the rate will 39.6 for income over $400k. Right now, $400k is 32% and that goes up to 35% at $418,850. So we're talking a increase of 7.6% and 4.6% respectively. He is also proposing SS tax on wages over $400k, which would be an additional 6.2%. Plus he is proposing two caps on itemized deductions (a 28% cap and return of the Pease limitation). Someone with $450k of income is probably looking at a good $15k in additional taxes if all this goes into effect (obviously depends on what your itemized deductions are). [/quote] Even in this scenario, (and that is a big IF all of those proposal gets passed) and someone making nearly [u]half a million a year[/u] has to pay a measly $15k in taxes, that is a 3.3 percentage point increase. So they go from paying an effective 21.3% rate (on average) to 24.6%: https://www.taxpolicycenter.org/statistics/effective-tax-rate-agi-1935-2015 For the past 75 years legislation has been passed continuously lowering their effective tax rates, bringing their effective tax rates closer in line with the rest of the population - (in other words, a less progressive and more regressive tax system). Personally, I think a progressive tax system is necessary in our society, and if someone making $450k annually can't handle 3% more in taxes, they need to assess their spending habits because you should NOT have liquidity constraints at that income level. https://www.taxpolicycenter.org/taxvox/effective-income-tax-rates-have-fallen-top-one-percent-world-war-ii Need I remind people that we used to have a top statutory tax rate of 94 percent. [/quote]
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