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How The Expiring Bush Tax Cuts Affect You

Thursday, July 8, 2010 - 6:20 PM
I'm not sure of the exact statistic, but I'm learning that a high percentage of Americans, don't actually have to pay ANY taxes (that has been stated/discussed significantly on CNBC over the past year).  Do you know the exact statistic, Ken?  Or does anyone have a link to that stat?

My inclination is to think that all involved on this blog will be affected heavily by the expiring tax cuts.

This article has a lot more in it:

http://finance.yahoo.com/taxes/article/110005/how-the-expiring-bush-tax-cuts-affect-you?mod=taxes-advice_strategy
Higher Tax Rates for All

The current six rate brackets of 10%, 15%, 25%, 28%, 33% and 35% will be replaced by five new brackets with the higher rates of 15%, 28%, 31%, 36% and 39.6%.

4
MikeMike327 posts since
Feb 22, 2010
Rep Points: 875
1. Thursday, July 8, 2010 - 7:41 PM
An AP article estimated that 47% paid no federal income tax in 2009.

There's a good discussion of this in this Media Research Center article.
4
Ken TuminKen Tumin5,442 posts since
Nov 29, 2009
Rep Points: 123,754
2. Thursday, July 8, 2010 - 11:59 PM
I think the US tax rate is not progressive enough!

Let's say we had a flat rate tax of 25% for everybody - what would that mean? A person who earns $10,000 a year would pay $2,500 and have $7,500 left to eek out an existence. Somebody who earns $100,000 pays $25,000. Who do you think is hurt more by such a tax scheme and can barely survive?

There are many unavoidable fixed fees (e.g., car registration) and taxes (state sales taxes) already that take out a proportionally much bigger chunk out of small incomes while rich(er) people just shrug them off and pay them with their chump change.

A steeper progressive tax scheme with a top bracket of 45% or 50% for top earners would go a long way in reducing America's budget deficit and ultimately its huge debt.

Another flaw: In 2010, the Social Security Wage Base is $106,800 and the Social Security tax rate is 6.20% paid by the employee and 6.20% paid by the employer: A person with $10,000 of gross income will have $620.00 withheld as Social Security tax from his/her check, with the employer sending an additional $620.00. A person with $110,000 of gross income in 2010 incurs Social Security tax of $6,621.60 (resulting in an effective rate of approximately 6%, with $6,621.60 paid by the employer. A person earning a million dollars in wages will pay the same $6,621.60 in Social Security tax (resulting in an effective rate of approximately 0.66%), with similar employer matching. In this case, the tax is actually regressive - the more you make, the less you pay into the system - absolute lunacy! Anybody who wonders why Social Security is in trouble - look no further: do away with the taxable income cap!
2
darkdreamer4udarkdreamer4u174 posts since
Jun 11, 2010
Rep Points: 630
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