100 Days Until Taxmageddon

[Deleted]

I don't think there is any chance of it happening like that across the board. A fix will be in.

That said, it would be returning to rates which sustained perfectly adequate ecnomic growth in the past... it isn't like we'd be returning to a 54-90% tax rate. Eventually we're going to have to abandon the tax vacation we've been on. Its unsustainable. Some of those brackets (or equivalent measures) will have to change.

I argue against the idea that the MAJORITY of small businesses are taxed at the highest rate.

And even for those taxed at the highest rate, its still progressive. The effective tax rate for the highest bracket in the last year available was more like 20-22%. And remember there are always those .1%ers like Romney who only paid 14% (and that because he didn't deduct his charitable giving...).

[jeffreymo]

I didn't notice this mentioned in the article, but another increase that is supposed to go into effect is the removal of the 2% reduction on Soc. Security contributions (from 4.2% back to 6.2%)

[kittypuppymom]

I am sorry the SS should go back to the 6.2%. If you make $50,000.00 a year you were only saving $20.00 a week. Granted that $20.00 could buy lunch or maybe 1/4 tank of gas. But SS is struggling so why bother. How many people are making $50,000.00 a year?

[Sum Dum Gai]

How many people are making $50,000.00 a year?

Half the population.

[Sum Dum Gai]

Regarding the op, I'm not that worried about it. We like to look at the percentages on the brackets like they're written in stone. The 25 or 28 or 32% bracket. My ass. Nobody actually pays that. You have to look at the whole picture. Deductions, loopholes, tax deferred retirement savings. Last year I had a base salary in the low six figures. I paid right around 5% in federal income taxes.

I keep hearing numbers like Taxmageddon will be a 20% tax increase for most people. So I'll pay 6% instead of 5%... big deal. I probably won't even notice.

What does scare me is Romney being cagey on which loopholes he wants to close. If they get rid of the mortgage interest deduction that's going to cost me a boat load.

[Deleted]

"What does scare me is Romney being cagey on which loopholes he wants to close. If they get rid of the mortgage interest deduction that's going to cost me a boat load."

Did you see the interviews of Romney and Obama on 60 minutes last Sunday? If not, you might want to watch it on the web (CBS). I thought both interviewed really well. My impression when Romney was asked that question is that he wants to make a win for both sides. Nothing like getting caught saying "No new taxes" and having to turn around and do exactly that.

I wouldn't worry too much about the mortgage interest deduction suddenly going away. As it is you are limited to a loan limit of $1M for your principle home and 2nd home and $100k home improvement. I think it's an easy fix to eliminate the 2nd home interest. Also gradually lowering the loan limit to $800k or phasing out the deduction for folks who make $500k. Not that eliminating these loopholes will generate any significat tax revenue. It's just less of a "fat cat" tax break and an easy political win for both parties.

[Opti]

Sept 25, 2012 11:13:42 GMT -5 Sum Dum Gai said:

How many people are making $50,000.00 a year?

Half the population.

Its close to the median income probably high for low cost states.
But roughly 50% of the people earn that much or more.

[Sum Dum Gai]

Its close to the median income probably high for low cost states.
But roughly 50% of the people earn that much or more.

Technically the $50k median income is for households, not individuals, so the number of individuals earning $50k is lower. However, $50k still isn't that much money. It's not out of reach for most people.

I wouldn't worry too much about the mortgage interest deduction suddenly going away. As it is you are limited to a loan limit of $1M for your principle home and 2nd home and $100k home improvement. I think it's an easy fix to eliminate the 2nd home interest. Also gradually lowering the loan limit to $800k or phasing out the deduction for folks who make $500k. Not that eliminating these loopholes will generate any significat tax revenue. It's just less of a "fat cat" tax break and an easy political win for both parties.

I agree that something like that is a lot more likely than eliminating the mortgage interest deduction completely, but it would be nice to hear Romney lay out specifics instead of just saying he'll close loopholes for middle class Americans with no details. As a middle class American that's taking advantage of tax deductions, I want to know exactly what he's looking at cutting and how it's going to affect me.

[Opti]

Sept 25, 2012 13:47:44 GMT -5 Sum Dum Gai said:

Its close to the median income probably high for low cost states.
But roughly 50% of the people earn that much or more.

Technically the $50k median income is for households, not individuals, so the number of individuals earning $50k is lower. However, $50k still isn't that much money. It's not out of reach for most people.

I don't agree with you on the last statement. Unless people are willing to go into business for themselves there are quite a few professions one can expect to make less than $50K/yr. in today's current dollars for their entire working career.

Less than 10 years ago I was told the manager of an anchor department store in one of the pricier NJ malls only made $50K/yr or thereabouts. Given what my supervisor made it was entirely if sadly plausible.

[Sum Dum Gai]

Unless people are willing to go into business for themselves there are quite a few professions one can expect to make less than $50K/yr. in today's current dollars for their entire working career.

Nobody forces anyone into those careers though. A person of average intelligence, with a high school diploma, can find jobs that are on a career path where they can expect to make $50k a year down the road. It's not an income goal that requires extraordinary connections, educational background, luck, or building/inheriting a huge company.

[Deleted]

There are a lot of people who never make 24$ an hour...

[movingforward]

Sept 25, 2012 14:22:56 GMT -5 Sum Dum Gai said:

Unless people are willing to go into business for themselves there are quite a few professions one can expect to make less than $50K/yr. in today's current dollars for their entire working career.

Nobody forces anyone into those careers though. A person of average intelligence, with a high school diploma, can find jobs that are on a career path where they can expect to make $50k a year down the road. It's not an income goal that requires extraordinary connections, educational background, luck, or building/inheriting a huge company.

Having only a high school diploma will not get you anywhere near 50K in my area. Most jobs paying above $12 an hr require a college degree to even walk through the door for an interview.

[Deleted]

And even at 24$ an hour, that's assuiming 52/40. Lots of people aren't salary... and many don't get 40 hours a week every week, so then you have to be making considerably more than that.

[Sum Dum Gai]

Having only a high school diploma will not get you anywhere near 50K in my area. Most jobs paying above $12 an hr require a college degree to even walk through the door for an interview.

People say that about my area too. I earn over double that, with benefits, and no college degree. I'm not saying you can leave high school and be making $50k+ a month later. However, you can work into that over time. Plenty of direct sales type jobs can make somebody $50k+ a year. A district/regional manager at most retail chains can make that, and you can work your way from cashier, to shift manager, to store manager, to district manager.

We aren't talking about a salary figure that requires an Ivy League education and a millionaire parent with connections. It's a pretty standard mid career salary. It requires you to get your foot in the door and work for a while.

Half of all households in the US find some way to pull in that much money. It can't be that hard.

[Deleted]

Sept 25, 2012 15:17:41 GMT -5 Sum Dum Gai said:

Having only a high school diploma will not get you anywhere near 50K in my area. Most jobs paying above $12 an hr require a college degree to even walk through the door for an interview.

People say that about my area too. I earn over double that, with benefits, and no college degree. I'm not saying you can leave high school and be making $50k+ a month later. However, you can work into that over time. Plenty of direct sales type jobs can make somebody $50k+ a year. A district/regional manager at most retail chains can make that, and you can work your way from cashier, to shift manager, to store manager, to district manager.

We aren't talking about a salary figure that requires an Ivy League education and a millionaire parent with connections. It's a pretty standard mid career salary. It requires you to get your foot in the door and work for a while.

Half of all households in the US find some way to pull in that much money. It can't be that hard.

Depending on where you live.

[movingforward]

"Half of all households in the US find some way to pull in that much money. It can't be that hard."

Well, now I feel like real loser I make 50K a year and have been in the same industry for 12 yrs and have 2 degrees.

[Sum Dum Gai]

Depending on where you live.

If you live somewhere with no jobs, or a very limited job market that pays shit and is impossible to get your foot in the door, the best thing you could ever possibly do for yourself is move. Why do you think I don't live in the podunk ass town I grew up in? The job market there blows. Everybody knows it blows. There's no industry at all. It's a bunch of retired folks, and a smattering or low end chain establishments. So the only jobs are in health care which requires training, certification, etc., or McJobs. Anyone with any ambition gets the hell out ASAP. The less ambitious ones are still sitting there flipping burgers at McDonalds, and probably spending their free time griping on the internet about how the game is rigged, and jobs don't pay anything, and $50k makes you rich.

It's a free country. If your parents chose to raise you in a dismal job market, you're free to work whatever crap job you can find as a teenager to save up for a bus ticket and get the hell out when you reach adulthood.

[movingforward]

I live in one of the most employable cities in the nation and 50K is a decent salary around here.

ETA: I am talking about the salary of an individual, not an entire family

[midjd]

Yeah, I think it has more to do with COLA than the health of the local job market.

[Sum Dum Gai]

I live in one of the most employable cities in the nation and 50K is a decent salary around here.

So, you start working and eventually work your way up to $50k. It's still not out of reach for people. It just takes either more education, some time on the job, or taking on some additional risk.

ETA: I am talking about the salary of an individual, not an entire family

So am I. You have to remember that a significant chunk of the "households" the IRS and other agencies talk about consist of a single person living alone. There are probably more singles making $50k on their own, than there are couples that each make $25k a year for a combined $50k. Another chunk of the $50k+ households are going to be a single wage earner with a non working spouse. $50k for an individual is a totally achievable goal for the vast majority of people. As long as you have at least average intelligence, ok health, a smidge of planning, and work ethic, you can get there.

[Deleted]

Half of all households, not individuals.

[Sum Dum Gai]

Half of all households, not individuals.

Yes, and what percentage of those households consist of a single adult? What percentage are a family with only one wage earner? A fairly large percentage of individuals have to be making $50k+ in order to get half of all households over that threshold.

[Deleted]

I typed before i read your 20, which is a good take on the issue. I'm not sure of the breakdown, but its not 50% of individuals though... not sure if we can find it?.. don't have time to look now.

[Sum Dum Gai]

This is what I found

State-by-state: Average income per person
Highest to lowest by state:

Connecticut 56,001
Massachusetts 51,552
New Jersey 50,781
Maryland 49,025
New York 48,821
Wyoming 47,851
Virginia 44,762
Alaska 44,174
New Hampshire 44,084
Washington 43,564
Illinois 43,159
California 43,104
Minnesota 42,843
Colorado 42,802 26
Rhode Island 42,579
Pennsylvania 41,152
Hawaii 41,021
North Dakota 40,596
Vermont 40,283
Delaware 39,962
Kansas 39,737
Nebraska 39,557
Texas 39,493
Florida 39,272
South Dakota 38,865
Louisiana 38,446
Wisconsin 38,432
Iowa 38,281
Maine 37,300
Oregon 37,095
Nevada 36,997
Missouri 36,979
Oklahoma 36,421
Ohio 36,395
North Carolina 35,638
Michigan 35,597
Georgia 35,490
Montana 35,317
Tennessee 35,307
Arizona 34,999
Indiana 34,943
Alabama 33,945
New Mexico 33,837
Kentucky 33,348
South Carolina 33,163
Arkansas 33,150
West Virginia 32,641
Utah 32,595
Idaho 32,257
Mississippi 31,186

United States - 40,584

Numbers as of 2010
USAToday www.usatoday.com/news/nation/2011-03-23-state-income-table_N.htm

[Sum Dum Gai]

Worst case scenario you live in Mississippi, where the average worker still makes over $30k, and $50k is probably attainable with a little planning.

Best case scenario is probably living in Wyoming, where the cost of living is really low, and the average worker makes almost $50k already.

[Rocky Mtn Saver]

I question anyone using the phrases "best case scenario" and "living in Wyoming" in the same sentence.

Ha ha ha, just kidding, Wyoming-lovers! Don't hurt me! I'm sure there are things to love about the state, I've just never seen any. ;D

[Opti]

Average is much more deceptive than median.

From a quick google search, Wiki answers guesstimates that
roughly 25% make $50,000 or more.

wiki.answers.com/Q/What_percent_of_Americans_earn_over_50000

Towards the bottom of the page you'll see other links.

[Sum Dum Gai]

I question anyone using the phrases "best case scenario" and "living in Wyoming" in the same sentence.

LOL! Why do you think they pay folks so much up there? Ain't nobody living there for the sub zero temps, and nightlife.

[Deleted]

Sept 25, 2012 16:16:10 GMT -5 Sum Dum Gai said:

This is what I found

State-by-state: Average income per person
Highest to lowest by state:

Connecticut 56,001
Massachusetts 51,552
New Jersey 50,781
Maryland 49,025
New York 48,821
Wyoming 47,851
Virginia 44,762
Alaska 44,174
New Hampshire 44,084
Washington 43,564
Illinois 43,159
California 43,104
Minnesota 42,843
Colorado 42,802 26
Rhode Island 42,579
Pennsylvania 41,152
Hawaii 41,021
North Dakota 40,596
Vermont 40,283
Delaware 39,962
Kansas 39,737
Nebraska 39,557
Texas 39,493
Florida 39,272
South Dakota 38,865
Louisiana 38,446
Wisconsin 38,432
Iowa 38,281
Maine 37,300
Oregon 37,095
Nevada 36,997
Missouri 36,979
Oklahoma 36,421
Ohio 36,395
North Carolina 35,638
Michigan 35,597
Georgia 35,490
Montana 35,317
Tennessee 35,307
Arizona 34,999
Indiana 34,943
Alabama 33,945
New Mexico 33,837
Kentucky 33,348
South Carolina 33,163
Arkansas 33,150
West Virginia 32,641
Utah 32,595
Idaho 32,257
Mississippi 31,186

United States - 40,584

Numbers as of 2010
USAToday www.usatoday.com/news/nation/2011-03-23-state-income-table_N.htm

Averages should never be used for this kind of data, only the median. Using the average should automatically make you suspicious of the article using it.

[Sum Dum Gai]

I found a few for median, but none that list it by median worker. Just median adult. So they're including non working spouses, the disabled, and whatnot in the number, which makes it suspect too.

ETA - I'm not against including the unemployed in the number, since they want to work and can't find any, which is a valid segment of the labor market. However, including a spouse who chooses not to work isn't in my opinion. Yes they're an adult who could work and has zero income, but they're choosing not to participate in the labor market.