Recalling the sharp rhetoric of the presidential campaign, one would have assumed that only the 2 percenters were going to be hit by the recently settled fight between the House of Representatives and the White House.
To the contrary. Anyone earning a paycheck will be slammed by the bill. Here are a few examples of how the middle class will be impacted by the new tax law:
If one makes $25,000 a year as a single taxpayer, one’s income tax will fall by $48 in 2013 from what that wage earner made in 2012. However, payroll taxes will increase by $500 in 2013 over 2012. That’s a net tax increase of $452.
If one is married and makes $65,000 a year and files a joint tax return, income taxation on that filing will decline by $98. However, one should expect to pay a total of $10,828 to the federal government. That married couple will have a net tax increase of $1,202 in 2013.
So far, the 2 percenters haven’t even made a blip on the radar screen.
If one is single and earns $140,000 a year, and claims $15,000 mortgage interest, gives $2,000 to charity, declares $2,500 in dividend earnings and $2,500 long-term gains on investments, one should expect to pay $36,469 in federal taxes. That’s an increase of $2,230 over last year.
If one is married and has two children living at home, and is paid $240,000, claims $25,000 in mortgage interest, shells out $5,000 to charity, claims $5,000 in dividends, and claims $5,000 in long-term gains, expect to pay $60,974 to the federal government.
For a married couple with two dependents making $500,000 (that’s $50,000 more than the $450,000 base line agreed to by the White House and Congress) expect to pay $160,343. That’s $16,645 more than the same couple with dependents paid in 2012. These numbers were furnished by the Tax Foundation.
Now, it’s clear that the higher 39.6 percent rate for those earning over $450,000 is a huge increase. However, when one evaluates the tax bill of guys that are wealthy — the super rich as the president described them during his campaign — they will not pay more in income taxes because most super rich don’t have income. They derive their wealth from assets they already possess or they have dividend income which is still taxed at a lower rate of just 20 percent.
Warren Buffett, a staunch supporter of increasing taxing the rich, will continue to pay less than his secretary because he is in that elite class that only has dividend income.
Smoke and mirrors anyone? It’s a big sham and our Congress is fully on board with this charade promoted by the president.