One of the things holding up negotiations on the so-called fiscal cliff is a certain party’s insistance that the Bush tax cuts be extended for the top 2%. They want to prevent the rate from increasing from 35 percent to 39.6 percent.
This is for the top marginal tax rate. You are an idiot or a liar if you think that this small increase will be at all burdensome on the lives of the very rich. They want to fool you into thinking that a tax increase affects everyone the same, so that you might have some sympathy for those at the very top. The truth is different levels of income lead to different levels of lifestyle stability.
Past a certain level, your everyday life is not really affected by changes in income. On the other end of the spectrum, the same change in income/wealth creates more dramatic differences in one’s life. On the chart, if a new tax burden moves you from Point A to Point B, your lifestyle does not change. If you move from C to D, you will feel the sacrifice. A move from E to F has a more catastrophic effect. That’s why we’ve set up tax brackets in the first place.
I agree that there is a problem with that top bracket. The people at the $250,000 line would be impacted by our need to increase taxes on multimillionaires. The solution is add a new bracket. This is not unprecedented; we used to have dozens of them. I’ll present my idea for a new bracket in another post.
Today, know that a major part of the holdup on a fiscal cliff deal is one side’s demanding a tax break for people who don’t need the help. If they budge on the issue, they are demanding on so-called “entitlement” cuts — from the people who can’t afford to give up those very services. If such a deal goes through, everyone will sacrifice something, but think about how their day-to-day lives will be affected. The top 1% won’t notice a thing, while the cost of the “entitlement” service cuts will have to be paid out of the pockets of the people further down the income scale.
I’m so sick of hearing the “Crazy Rich,” their paid mouthpieces, and delusional wannabes complain about paying 39.6% Look at what they used to pay:
There was plenty of investment going on and paying the top marginal tax rate never sent anyone to the poorhouse. Do the math. Almost all millionaires who pay their taxes are still going to be millionaires. So quit your damn crying.