Sunday, May 11, 2008

90% Marginal Tax Rate for the Middle Class

I gave some thought about how those making above $160K (for a couple) aren't welcome to receive the $7,500 First Time Buyer's tax credit and realized that we're actually getting more screwed than I originally thought.

You see, the phase out for this tax credit starts at $140K runs to $160K; so it's a total of 20K in income that determines whether you get the full $7,500 or zilch. It works the same way for the Bushie tax credit: with two kids at $140K in annual income you'd get $1,200, but at $160K in income again, you'd get zilch. That is one expensive $20K in income, but how expensive is really?

On 2oK we suffer the following losses and taxes:

$7,500 exclusion from First Time Buyer's Credit
$1,200 exclusion from Bushie Tax Credit
$7,200 Federal Taxes (would have paid regardless)
$1,800 State Taxes (ditto)

For a grand total of $17,700 in taxes or loss of tax credits or the equivalent of a 90% marginal tax rate. 90%! I defy any reader to find a single group in America that pays the same effective tax rate as this 140K to 160K income group.

Have we all done something to offend those in power? If so, how did we manage to piss off both sides of the aisle and the legislative and executive branches of government at the same time. (Let's remember that is was W who had us excluded from the "stimulus package" and it was Speaker Pelosi who sponsored this lovely First Time Buyers legislation.)

Well, I really don't think we've done anything to offend any one. I'd like to think of it as an 'oversight.' That our lawmaker's didn't mean to screw us and that some of the details fell through the cracks and that the 90% effective tax rate is just a big mistake. And mistake that ought to be rectified immediately.

I've already emailed Bush, Boxer, Feinstien and my Congressman Dana Rohrabacher; I'd invite you to do the same. No group in the US should be asked to pay a 90% marginal tax rate. It's unfair, it's unAmerican and it's anti-capatilist.

Call or write your representatives today!


Anonymous said...


Nice blog. There are LOTS of other hidden taxes/confiscation scams out there.

Student loan interest deduction starts to get QUICKLY phased out around 60K of income.

I paid just over $9k in interest on my student loans last year, and very little of that is deductible.

Government always yammers about how important education is, but actions speak louder than words!

Patrick said...

Real very good real estate blog I have ever seen. Good going, Keep it up

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accounting fort worth said...

A progressive tax scheme charges very small amounts to the poor and then the tax rate gets much larger from middle class to upper class brackets. A regressive tax reverses this order, and a flat rate charges all socioeconomic classes the same percentage. Thanks.

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