Tuesday, January 08, 2008
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55% Tax Rate under Obamamonics?
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Posted by:
Michael Medved at
2:40 AM
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The year is young, but it's possible we already glimpsed the scariest horror movie of 2008. In Saturday night's Democratic debate, Barack Obama alluded to his big tax plans--- including repealing the Bush "tax cuts for the rich" and eliminating the cap on Social Security/Medicare payroll taxes. This means that he'd abandon all pretense that Social Secuirty and Medicare are pension programs -- since the elimination of the cap (taxing all income, with no limit) would remove any connection between the level of contributions a citizen makes and the benefits he takes.
In pratcial terms, the impact would be huge. Today, the top marginal tax rate is 35%, and income above $102,000 a year isn't subject to the payroll tax. That means that the money you're lucky enough to earn above $102,000 gets taxed at a rate of 35 cents on the dollar, at most. Under Obamanomics, on the other hand, we would go back to the old Clinton era top marginal rate of 39.6%, PLUS making income above the cap fully subject to the payroll tax--- usually a combined 15%, but almost sure to go up.
In other words, unless my calculation is mistaken (please tell me if you think it is), we'd be looking at paying Uncle Sam as much as 55 cents on the dollar for income earned above that $102,000.
If anyone still thinks this election doesn't matter, just consider....a normal, middle class family (with two incomes) will today earn $200,000 and still struggle to pay a mortgage, and college expenses, and so forth, in many Metropolitan areas. And yet, under a new Democratic President, that family could be looking at additional tax burdens that confiscate THE MAJORITY of their additional income.
Talk about punishing effort and penalizing success.... welcome to the brave new world of "change."
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