Are you getting that feeling like your little raft is about to plunge over the edge of Niagara Falls into the mist and rocks below? The "fiscal cliff" talks began today! One of the biggest points of debate is raising taxes. Obama wants to freeze taxes for those of us who make under $250,000 and allow the Bush tax cuts to expire as planned for people making over $250,000. Republicans don't want to increase tax rates. Instead, they want to raise revenue by limiting deductions that benefit the wealthy.
Just for a little context, people who gross $100,000 a year or less are taxed at 35 percent. If the Bush tax cuts expire, people who gross over $250,000 a year will return to a 39.6 percent tax rate (from 35 percent). The median household income for Americans is around $50,000. How do Americans feel about a tax rate increase for relatively wealthy people? Let's take a look at both sides of the argument.
Arguments for allowing Bush tax rates to expire: By allowing tax rates for those making over $250,000 to return to 39.6 percent, we could raise $850 billion over a decade. Another argument is that the Bush tax cuts simply didn't work. They cost us money and didn't result in economic growth. Instead, they coincided with one of the most disastrous financial crashes since the Great Depression. Obama has said he'd be willing to accept a smaller tax increase for the wealthy.
Arguments against any tax rate increases for the wealthy: Particularly among Republicans there is support for a flat tax for everyone. Some people feel it's unfair to tax one group of people more than another group of people. Opponents to a tax hike point out that this could affect small business owners and discourage hiring. They also feel it punishes people for being economically successful.
Economist (and one Stir staffer's pick for "Sexiest Man Alive") Paul Krugman says Obama must be willing to go off the fiscal cliff rather than, as he puts it, allowing Republicans to blackmail him financially for the third time. We'll have to wait and see how far the players in Washington are willing to go! In the meantime, a poll from this summer shows that 44 percent of Americans believe a tax hike on people earning $250,000 or more would help the economy. Only 22 percent believe such a hike would hurt the economy. Everyone else just shrugs and says, "Eh."
What do you think -- should tax rates for people earning $250,000 or more increase to pre-Bush levels?
Image via TaxCredits.net/Flickr
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Comments 15
You should explain it correctly. People who make over $250,000 will only be taxed 39.6% on the income IN EXCESS of $250,000. For example, if a person makes $300,000 they will be taxed 35% on the first $250,000 and 39.6% on the $50,000 above the cap. Even the President fails to make this distinction when he is explaining the policy.
I say we need to get rid of ALL tax credits. Then, tax $350k and up more only for 5 years.
Fair share??!!?! How is this fair? Someone please tell me why it is "fair" to disproportionately penalize someone for being successful. (Especially since it is likely that those paying more are using far far less of the total government services/benefits than someone paying norhing.) How about we all pay a fair share of what we earn. Even if it's just a small amount of what we earn. Then everyone at least has a horse in this race...a reason to hold the government accountable for their out of control spending.
Have to say, as a house we make more than $250k. We both work long hours at stressful jobs. We are not rich. Have a very basic home outside of DC. We make more bc the cost of living here is so high, so it's not like we're sitting on a pile of cash - not at all. We are not jetsetters. I wish. I do wish we'd stop rewarding the slackers and punishing those who work really hard. That's not to say that someone who makes $60k year doesn't work hard, I bet they do. The reality is that the $60k person probably pays $20k a year in taxes and we pay $87.5k. We pay enough. Also, most of the funds that taxes pay for now don't benefit the people who make $250k. We don't need welfare, medicaid, food stamps, etc. I'm all for roads & military but they need to cut out the excess expenses and stop punishing hard workers.
If the Republicans cave to Obama's wishes it is still only enough money for the government to run for eight days. This isn't about anyone paying their fair share or fixing our problems, its about class warfare. The richest of the rich will still hire the best accountants to pay as little as possible and this will fall on the middle class anyway. We don't need people to pay more in taxes, we need the government to stop spending money they don't have. If we are making cuts lets start with Washington, they all need to give up their lifetime salaries and benefits and lead by example. Its ridiculous that these people go to D.C. as public servants and come back as millionaires. But what I seriously don't understand is if we are going to make cuts why we take from people that can't support themselves to give money to people that can.
I agree, the tax system needs to be more fair for all sides and we should've been focusing on tax reform all these years instead of pointing fingers at the rich and throwing our hands up. I own my own business and the taxes I pay are staggering. It is almost to the point where it is cheaper for me not to work than to continue in business. It is shocking that people find it acceptable to implement policies that encourage people to sit at home rather than work.