The Democrats in Congress are pushing for marginal tax rates of 100%. Is anybody surprised?

Question

From the Wall Street Journal. Remember, my socialist friends, contrary to your beliefs incentives matter and productive people will not accept nonsense such as this. All you will get is more pain, suffering and death.

Last week, Democrats on the House Ways and Means Committee released a draft of their tax plan that would raise the highest income tax rate by 4.3 percentage points to 39.3% immediately. And because the proposal doesn't extend the Bush tax cuts, the highest income tax rate would rise to the neighborhood of 44% after 2010. This would lift the top federal income tax rate higher than it was even under Bill Clinton.

And get this: For families with incomes between $250,000 and $500,000, the "marginal" tax rate paid on the next dollar of earned income could soar to 80%, or in some cases even above 100%. Why? Because when income rises above $250,000, some taxpayers would be kicked into the Alternative Minimum Tax -- which means that they lose tens of thousands of dollars of write-offs for state and local tax deductions, marriage penalty relief, certain child credits, and so on. The value of the lost deductions can exceed the value of the extra income earned. So some Americans could pay more

than $1 in taxes for every $1 they earn under the House tax plan.

BrandX, congratulations on completely missing the point. You may now place your thieving head back into your favorite sand, thank you.

Exposing your comment is so dead on it's incredible. No one has a clue what a 100% marginal tax rate would do to dis-incentivize the productive people who provide the resources for all the "compassion" the socialists love to dish out.

Andrew, simplistic you say? OK, let's give those marginal rates a shot and see what happens. Be very, very careful what you wish for.

Answer 1

Trying to explain what you just wrote to liberals is like trying to teach a rock to read a newspaper. Liberals have no clue what the phrase "marginal tax rate" means. Their responses to this question are hilarious.

Answer 2

The AMT was enacted decades ago as a means to collect a few bucks more in taxes from those who could best afford it. When enacted only a handful of taxpayers were effected.
Today, the AMT is the largest single revenue source for the IRS as lots of taxpayers are falling into this bracket.
Whether this is a good thing or a bad thing is being debated. Those who say this is a bad situation state bracket creep because of inflation is pushing the middle class into the AMT. Those who say it's a good thing claim there simply are more wealthy people these days.
Regardless of the reason, the congress cannot eliminate the AMT. It's bringing in too much money.

Answer 3

If this was from a WSJ editorial it is probably distorted in some way. Alternative Mininum Tax was changed in Bush's 2003 tax reform which steadily increases the number of people subject to AMT each year to where it reaches 25% of Tax Payers in 2010, while the under the previuos law the increase in number of number subject was much lower. The AMT is also on the table for reform.

Andrew M is correct. And yeah the republicans did nothing about AMT when they had the chance --

Are you threatening to commit acts of violence on members of Congress?

Answer 4

Don't forget adding the Marriage Penalty back and moving the Tax base rate from 10 to 15% thus adding 5 million working poor that were expempt back on the tax rolls........ for all you tax the rich message sheep, these will increase your taxes which effcts more of your disposable income than any hike on the rich.....

Answer 5

I am *absolutely* *not* surprised! The Defeat-o-crat mantra has been "eliminate tax cuts for the rich" ever since "W" took office! "Slick Willy" considered anyone who even owned a home to be "rich". When are they *ever* "gonna" *get it*? Only people who actually *earn* money pay taxes; not the people who are on the public dole - *they* get EIC!

People who are wealthy, like George Soros, Barbra Streisand, the Sheens, other Hollywood actors, Michael Moore, professional athletes, Nancy Pelosi, Harry Reid, John Warner, the Clintons, the Rockefellers, the Kennedys, other politicians, etc., can afford to hire lawyers to set up tax shelters to avoid paying their "fair share" of taxes, so they don't have to pay very much - that leaves just "rich" wage-earners to pay!

Answer 6

So, basically you are inventing fiction.

No Democrat is pushing for a marginal rate of 100%. Fact.

Currently, when people get pushed to AMT, and they currently do, they lose deductions and get hit with a higher tax bill. So the existing structure, approved and run by the previous Republican Congress, already had this so-called 100% rate.

Your question is completely misleading and fake.

Your views on incentive motivations are also exceedingly simplistic and one-dimensional, as well.

Answer 7

The GOP controlled congress and the Presidency for 4 years (2002-2006). The AMT loophole has been an issue for middle class folks for nearly a decade.

So why didn't the GOP fix this problem when they had the chance to ram-rod it through congress and onto Bush's desk for approval?

Answer 8

So this would affect the same people who are currently complaining about estate taxes, the people with access to more tax shelters than the rest of us could ever hope to, the people who can actually afford to pay more taxes and help the country and not have it keep them from making mortgage payments or afford to feed their families?


I'll get right on feeling that it's unfair.

Answer 9

No...but it is bewildering to me why people dont strive to accel. Don't you want to have 2+ houses, fleet of luxury automobiles, yachts, vacations, enough money to retire on 5 times over??? I plan on being one of these $500,000+ a year workers...thats not my fault no liberals want to acheive a goal such as mine...

Answer 10

Gee, I wish I made that much money as do 90% of Americans. Besides someone has to pay for the war in Iraq. Borrowing, borrowing, and more borrowing means that somewhere, some how somebody is going to have to pay back the loans and with interest. Wouldn't it be cheaper to pay it off early and avoid the trillions in interest?

Do you run your household on all borrowed money and expect to pass your debts on to your children? Apparently you do as you advocate that same thing for the federal government.

Answer 11

It sounds like the AMT needs to be fixed.