Saturday, December 8, 2012

Obama’s Plan to Tax Rich, $250,000 Figure May Mislead

NYTIMES points out how Obama is playing on the ignorant 98% of Americans who think tax the rich actually means something when in fact only 2% of the population makes over $250,000 and only 1% will be hit by any higher taxes.
President Obama’s insistence that marginal tax rates rise for families making more than $250,000 has convinced millions of affluent Americans that they are likely to be writing larger checks to the government next year.

But many of those families have no reason to fret.

A close look at the president’s plan shows that a large majority of families making up to $300,000 — as well as hundreds of thousands of families with even larger incomes — would not pay taxes at a higher marginal rate.

Because the complexity of the tax code makes it difficult to draw clean lines, they are the beneficiaries of choices the administration has made to ensure that families earning less than $250,000 do not pay higher rates.

Some of those affluent households would pay higher taxes next year under other parts of the president’s tax plan and increases imposed by the Affordable Care Act, but not under the centerpiece, the part most frequently promoted by the president and most bitterly opposed by Congressional Republicans.

....Furthermore, to remain consistent with the president’s original promise, the administration has adjusted the original numbers for inflation. When Mr. Obama says $250,000, the White House says he means “in 2009 dollars.” It is now proposing to raise marginal rates on families with taxable incomes above $246,000 — meaning, on average, families earning more than about $305,000.

While the president has said that he wants to raise tax rates for the top 2 percent, only about 1 percent of taxpayers will face higher marginal rates, according to an analysis by the Tax Policy Center, a widely respected research group.
This is why the GOP fight on the hill over this makes zero sense because the taxes being touted here as getting the rich is basically a sham except for the 1% too stupid to get good accountants.

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