In light of the election, we are hearing some different thoughts from some conservatives. Perhaps the most interesting is from Bill Kristol of the Weekly Standard (https://mail.google.com/mail/?shva=1#inbox/13af5f57502c4dbf):
“I don’t really understand why Republicans don’t take Obama’s offer to freeze taxes for everyone below $250,000,” he said. “Make it a million? Really? The Republican Party is going to fall on its sword to defend a bunch of millionaires, half of whom voted Democratic and half of whom live in Hollywood and are hostile.”
And he is quite correct. Seven of the top 10 richest members of congress are Democrats and Nancy Pelosi is #12. So they are doing it to themselves I like to say that these are the wealthy with a conscience. The truth is, however, that most wealthy people take advantage of tax loopholes (Mitt Romney being just one example) so raising the top income tax level will not hurt them.
Besides, there is the implication put out that if the income tax level is raised to 39.6% it will be on their entire income, whereas it actually is just on the sum ABOVE $250,000. Thus if you made $300,000, the 39.6% will be just on the $50,000 above $250,000 for an increase of just $2,480 over the 35% rate.
Showing posts with label $250. Show all posts
Showing posts with label $250. Show all posts
Monday, November 12, 2012
Thursday, July 26, 2012
IS AN INCOME OF $250,000/YR RICH?
Does earning $250,000./yr make you rich? Well, let's see, 80% of U.S. HOUSEHOLDS earned less than $100,065/yr in 2010 and 60% earned less than $61,800/yr.* Perhaps at least 80% of the population might be excused if they feel that those in the top 2% of earners ($250,000+/yr) are rich.
But what about the poor small business people? Please remember that a small business is one that has fewer than 500 employees, a number that includes some pretty big companies, if you ask me. Only 3% of all small businesses earn more than $250,000/yr according to the Joint Committee on Taxation. And the number of small businesses affected by letting the Bush tax cuts expire for those earning over $250,000 are estimated to be only 1.5% by the Center on Budget and Policy and the Tax Policy Tax Center. Even if you count only those small businesses that have at least one employee (Why you would do this I don't know, but I guess to spin the problem into a large sounding number.), the number earning in the top two tax categories increases to only 24%. Perhaps of some significance, however, is that these "large" small businesses hire 93% of the people in the small business category.
But something missed in all this is that small businesses that choose to have their business profits taxed as income, do so because there is some tax advantage (or from laziness). I give some references below, but there are many.** To give just one example, there is a tax credit for hiring a new employee and keeping them for a year or more. Heck, even we benefit from various tax deductions, and we earn less than half the $250,000. Also something missed in all this is if you earn, say, $300,000, you will pay the increased income tax only on the amount that exceeds $250,000. There are those who, incorrectly, seem to feel that you would pay the increased tax on the whole amount.
* http://www.census.gov/hhes/www/income/data/historical/household/2010/H01AR_2010.xls
** http://smallbusiness.aol.com/2011/02/08/overlooked-small-business-tax-deductions-5-things-you-need-to-k/
http://www.openforum.com/idea-hub/topics/money/article/31-small-business-tax-deductions-1
http://www.unclefed.com/AuthorsRow/Daily/fwddeductions.html
But what about the poor small business people? Please remember that a small business is one that has fewer than 500 employees, a number that includes some pretty big companies, if you ask me. Only 3% of all small businesses earn more than $250,000/yr according to the Joint Committee on Taxation. And the number of small businesses affected by letting the Bush tax cuts expire for those earning over $250,000 are estimated to be only 1.5% by the Center on Budget and Policy and the Tax Policy Tax Center. Even if you count only those small businesses that have at least one employee (Why you would do this I don't know, but I guess to spin the problem into a large sounding number.), the number earning in the top two tax categories increases to only 24%. Perhaps of some significance, however, is that these "large" small businesses hire 93% of the people in the small business category.
But something missed in all this is that small businesses that choose to have their business profits taxed as income, do so because there is some tax advantage (or from laziness). I give some references below, but there are many.** To give just one example, there is a tax credit for hiring a new employee and keeping them for a year or more. Heck, even we benefit from various tax deductions, and we earn less than half the $250,000. Also something missed in all this is if you earn, say, $300,000, you will pay the increased income tax only on the amount that exceeds $250,000. There are those who, incorrectly, seem to feel that you would pay the increased tax on the whole amount.
* http://www.census.gov/hhes/www/income/data/historical/household/2010/H01AR_2010.xls
** http://smallbusiness.aol.com/2011/02/08/overlooked-small-business-tax-deductions-5-things-you-need-to-k/
http://www.openforum.com/idea-hub/topics/money/article/31-small-business-tax-deductions-1
http://www.unclefed.com/AuthorsRow/Daily/fwddeductions.html
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