NEED DEBUNKING - Does $200K tax hike begin on dollar one?

[PE]

Someone wrote the following to me on a message board. According to this (linked) Herritage Foundation article, taxes will be raised not just on the income over $200K, but on all income for the $200K earner starting with the first dollar earned. It was my understanding that just the top marginal rate would change. If my understanding is true, then someone making $201K will still take home more than someone making $199K. If this guy's understanding is true, then that individual will be hit with a massive tax increase, not just for the income over $200K but the income up to $200K will also be taxed higher as well. In that case, it would be much better to earn $199K than $201K.

I have heard Kerry describe his tax plan in town halls and my understanding is that just the top marginal rate would change. I can't, however, find any documentation for this.


That’s NOT true PE, according to what I’ve read, http://www.heritage.org/Research/Taxes/wm483.cfm?renderforprint=1
all the income of someone earning over $200K/year is taxed at a higher level. “Their first dollar is taxed at 15 percent rather than 10 percent (the current Bush tax cut level), and their last dollar is taxed at 39.6 percent rather than 35 percent.”

They pay the Clinton era Cap Gains rate and Dividend Income rate "They lose the benefit of lower taxes on capital gains and dividend income. These income streams currently are taxed at a 15 percent rate, and Senator Kerry’s plan calls for the rate to jump to 20 percent for capital gains and to the pre-2001 ordinary income tax rates of 36 and 39.6 percent for dividend income.”

And they lose the marriage tax relief and child dependency expansion. "Taxpayers earning above $200,000 also lose the expanded child tax credit and marriage penalty relief and would once again be subject to the phase-out of personal exemptions and itemized deductions."

$1 over $200,000 and you lose the marriage relief, the expanded child credit, the lower Cap Gains rate and Dividend Income tax rate AND have EVERY DOLLAR taxed at pre-Bush cut levels! That’s not a small increase of 4% only on that income over $200,000, that’s a massive tax increase on anyone who crosses that artificial threshold.

[IIgnoreNobody]

1. Who cares? The 2% of Americans earning over $200K won't win it for *

[Toucano]

7. I agree

Although I'm sure it's a distortion, I'm not really worried either way.

[Warpy]

2. If the person is subject to withholding

yes, the withholding formula will take the increased tax burden on the entire salary into account when the amount is averaged out for the entire year, just like it does with the rest of us. However, if the withholding is excessive, or if the person leaves that job before the $200K threshhold is reached, then the excess will be returned when the person files his taxes, just like it is for the rest of us.

Chances are good that the bottom range of the people affected by that tax increase won't even notice increased withholding from week to week. The only people who are going to get socked and writhe in pain are the parasites who are raking in the millions in legalized embezzlement at major corporations.

[unblock]

3. never in the history of the income tax

has anyone ever even PROPOSED a measure that would cause someone making more income to take home less after taxes simply due to making more money.

they HAVE had rate "bubbles", where they might, say, tax income beyond $200,000 and extra marginal surtax to "undo" the savings from the part of their income taxed at, say, 15%. however, even in those cases, it still pays to earn more money.

it is also true that there are certain tax shelters that you can get only if your adjusted gross income is below a certain point. if you cross that point, you may immediately lose ALL of the benefit of that tax shelter. in that sense, yes, it might pay to keep your income just below that threshold, BUT you can always achieve this by DONATING the excess to charity in the last week of december.

so even in that case, you're still better off making more money, it just requires you to pay attention and give to your favorite cause.

[NYCGirl]

4. Here's a link where you can check it all out on the Internets!

http://www.johnkerry.com/issues/economy/

There's a detailed breakdown of the tax plan.

[HarveyBriggs]

5. Heritage foundation is BS

The tax is incremental. Check your IRS publications.

Heritage foundation is a group of rabid, frothing wingers.

Remember the Bush maxim: Lie early, lie often, lie every chance you get.

Harvey Briggs

[underpants]

6. PRINT THIS OUT -put it in your pocket

See Deloitte & Touche (credible enough?) table in my original post here:
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=996111

[Toucano]

9. Thanks! n/t

[factcheck]

10. The funny thing is...

... that I keep hearing about the top 1% who make more than $200,000 per year.

The honesty of this is that I believe that percentage is much, much lower.

Why?

The only people who would be affected are those who REPORT TAXABLE INCOME of more than $200,000 per year and those are most likely to be those who are making in the millions rather than a few hundred thousand.

What makes me think this?

Well, please do not be too harsh, but I will be honest. I make more than $200,000 per year. Not by terribly much, though. And, here is the truth: I report FAR less in actual taxable income. I don't need tax cuts, I don't care what the actual tax percentage is because there are so many other legal means by which one can derive income (as in money) without it being income (as in the IRS definition of income).

Therefore, most who make in the few hundreds of thousands of dollars per year are doing the exact same thing (probably all, but I will not assume that). We make our own tax breaks.

That being said, the only people who would suffer would be those who have income FAR greater than $200,000 that they could never find enough loopholes to bring their taxable income down below that level.

So, you may ask: why am I NOT voting for Bush?

One reason: he cannot admit nor accept responsibility for his mistakes; and a good leader MUST always be able and willing to do both.

[underpants]

11. Yeppers

Welcome to DU:hi:

;-)

[NMDemDist2]

8. by what I read (and what Kerry says) folks in the higher brackets

will go back to what they paid in 2000 (he wants to roll back the tax break Bush gave and put it back to where Clinton had it)