Is anyone else freaked out about the talk of re-implementing the 36% and 39.6% tax brackets for people who make over $250k? I am!
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I am too. I'm not at that income level yet but theoretically will be in the not so distant future and he's going to just take it away. I have gone to school forever and gotten lots of student debt for this....awesome. Way to motivate people to work hard and propel our economy forward.
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New tax brackets? I thought that the current discussion was over whether or not to let the Bush tax cuts expire or not... and that the tax brackets under discussion were the ones from the previous administrations.
Are new tax brackets being added?
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They are talking about altering the brackets, so it wouldn't quite go back to the ones under the previous administration.
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@mrbee: I was under the same impression.
Whats this about new tax brackets?
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I'm sure this is all just rattling the saber, so that both sides can come to a reasonable middle ground.
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@mrbee: @zippylef: yes, DH told me about these tax brackets the other day. Yup!
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The existing 10% bracket will go away, and the lowest “new” bracket will be 15%. The existing 25% bracket will be replaced by the “new” 28% bracket; the existing 28% bracket will be replaced by the “new” 31% bracket; the existing 33% bracket will be replaced by the “new” 36 % bracket; and the existing 35% bracket will be replaced by the “new” 39.6% bracket.
But there is talk of keeping the three lowest brackets and expand the 28% bracket.
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@krsmall: Yes. TBH, this may affect our decisions in the future as far as me being a SAHM. My husband is the breadwinner, but I still contribute a substantial amount to our household income, and we would really have to crunch some numbers if that tax bracket hike happens to see if me working and paying a nanny is worth it at that point if we're going to have a huge increase in taxes. Or if it's better for me to just not work and keep us in a safer tax bracket.
@Amelieisme: It brings out the lazy ass in me and makes me kind of hope this will help push me into being a SAHM. Which leads me to agree with you 1000% bc this tax bracket increase promotes mediocrity and encourages people not to strive for as much as possible. I'll take my college degree and years of experience and success and just sit the bench in order to avoid what I work for being taken from me.
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I am getting really burned out on politics. All the posturing and game playing is just getting tiresome to me. I'm sure they'll up somewhere pretty reasonable. If they don't, taxes are pretty low relative to historic rates.
I am an entrepreneur, and I will continue to start companies either way.
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@mrbee: I agree, I'm not going to work any less even though we will have to pay more in taxes.
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The politics are pretty annoying. They have to do something to pay for all this debt though.
I just get frustrated that we are going to increase taxes for those that are working hard to excel just so we can increase handouts to those that aren't working.
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No, not at all. My husband is a lawyer for the state and I work part time (as a tax policy analyst, actually). We make one fifth of what people in that tax bracket do. I would take making 5x as much and a 3% tax raise any day!
My state collapsed our tax brackets so the highest bracket is half of the federal poverty level. It's screwed up.
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@mrbee: all the american politics are exhausting and i'm canadian! i just listen to jon stewart and believe every word he says!
the cable news channels seem so all over the place.
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@jedeve: I have to agree with you 100% we also make MUCH lower than that, so I'm not affected by this, nor will I ever be in that kind of tax bracket.
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Canadian speaking...
My family's over 250,000 k taxes are near 45%. But we do get "Free" healthcare.
So I'm not complaining. My c-section and birth cost... $15 for the upgrade to the private room. That's it!
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I am nowhere near the higher tax bracket, so I'm not so worried the higher income tax hike. But if they change the tax brackets, I honestly think I'm still ok with that. Will it make things a little tighter for us? Yes. But I'm willing to pay slightly higher taxes for things like universal health care. I don't view it as paying for "handouts." Health care should be a right, not a privilege.
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I'm not worried about the increase in taxes at all. I WISH we were making $250k! Even paying almost 40% in taxes, I'd still be taking home more than I do now! Heck, more than I do BEFORE taxes!
I'm more worried about sequestration, as the budget cuts to the defense budget will impact me directly, as I work for a defense contractor. I hope I get to keep my job and I'm willing to pay more in taxes if that's what it takes!
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I wish I was in the situation where this would affect me :). I agree though the higher income brackets need to pay more- $250k is pretty substantial. I don't know anyone my age (mid 30s) that makes that with a combined HH income.
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Not worried. We are at a historically low point for tax rates, eventually they were going to have to come back up.
I strongly believe our success is determined by how hard we work, so we will continue to work hard and if that means we tighten the belt a little than so be it. At this point it is all talking points anyways.
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We're def concerned... waiting to see what unfolds. Doesnt changr our work ethic though
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My family is in the same boat as @IcebergMom and never did my dad feel that he shouldn't work hard as a businessman so that he could pay less taxes. To say that it promotes mediocrity is sad. I'm assuming that if your household income is over 250k you have enough to contribute to RRSPs (or IRA/401k) and take advantage of tax credits to offset the taxes you pay anyways.
A lot of it is political posturing and game playing right now, and they'll end up with a reasonable resolution, like what @mrbee said. Either way, revenues need to come from somewhere...
@IcebergMom: When i was living in ON, i wasn't happy with the health tax but i still accepted that money had to come from somewhere, and it was for the greater good. Our taxes in Canada are higher, but i'd rather live here!
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@littlebug: A right, indeed.
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Definitely concerned. Particularly because some of the people I love most are in that tax bracket due to their businesses though their take-home pay is MUCH less. We're already seeing a lot of layoffs and it makes me really nervous, then you add this to it...
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@mrbee: I agree!
I dont make over 250k right now but when I do hit that bracket I will be ok to pay more. When I lived in england I paid higher taxes for the health care system there and I was fine with it. You never know when you might fall back into a lower income bracket and really appreciate a system that helps everyone
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What you all don't understand is that some of us who have that income potential have worked very hard to get there. I am 32 and just now out of school. I have not been able to invest in IRA's/401K's and the like because I have not made any money until now. I have $170,000+ in student loan debt. All for the promise of a carrot that is being taken away. I am not saying I am poor or struggling to eat. I am not saying that I won't be working hard for the next 30-40 years. I will. I have worked hard to get to this point. I AM saying that if I were 20 and deciding on a career path...I may have made some different decisions. So, yes, I am unhappy about the tax increases. The policy on such a high percentage being taken away at this income level does not motivate people to work hard. And it does nothing to the super wealthy who already have money in their bank accounts. It basically creates a two class system: those who have always had money and those who have not. There is no way to earn your way from one category to the other. I do realize there is nothing I can do about it at this point. But do I worry and feel a little cheated? Yes, I do.
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@Amelieisme: wow. I dont think anyone says you didnt work hard to get where you are.
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@Amelieisme: I had read that 12 years ago, tax rates were higher than they were now? Not 100% sure but my sense was that taxes were temporarily lowered in 2001 and 2003... with the understanding that those taxes would revert at the end of 2010.
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Anybody who is employed by a large corporate should be concerned. The effect is going to trickle down to employees, whether or not they make the 250K/year or not. There's a lot more to it. A lot of taxes are going to go up, not just income taxes. Marriage taxes will increase and the child tax credit will be reduced. I'm sure there are more. My payroll tax will increase approximately 2% and I don't make 250K/year. This is just the impact the fiscal cliff has on my company.
Budget cuts and tax increases may tip us back into the recession.
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@Amelieisme: Some of us who will never have that income potential worked very hard to get where we are, too. Just because I chose a career that will never in a million years pay me that much money doesn't mean I didn't bust (and continue to bust) my ass to be successful. I chose it because it was a calling; it was what I knew in my heart was right for me. I knew going into it that the $250K tax bracket would never be within my reach, and I didn't care. It kind of feels like you're saying that people who make less money didn't work as hard, and that's unfair.
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@littlebug: I agree. I make no where near $250K and it's not like I've been coasting along, not working hard to get my college degree and a good paying job.
That being said, I wouldn't mind paying higher taxes if I were to receive a tangible benefit. For example, Canadians pay a higher tax than I do but get health care in return. It feels like taxes keep increasing, but to what benefit?
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Amelieisme may not necessarily work "harder" than other people, but I'm willing to bet that if she makes that kind of money, she works many more hours.
Typically speaking, if you're making 150K a year, you're in a profession where you're hitting 80 hours/week, easily. If you make 35K/year, chances are, you do not. There's a reason my manager makes double what I do. Why would he do all that extra work for the same salary? Nobody would!
At least, everybody I know who makes that kind of money works many, many more hours than I do....it's not to say that I don't work hard, too, but uh, they do work harder (as in more hours/more stressful job/etc). They also tend to have numerous degrees.
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We are not in that tax bracket, so to answer the initial question, no. I have to chime in and point out that the 'cliff effects' that some of you are talking about (working more won't balance out the extra time/effort if it bumps you into a higher tax bracket) are a real problem for those who are living in poverty.
BUT take a minute to consider how cliff effects that currently exist affect people who are earning lower wages on a very real level -i.e. if they get a 50 cent raise, they are no longer eligible for any child care benefits, and end up with significantly less money than before (here is a simple over view http://www.incap.org/documents/iiwf/2011/FINAL%20Cliff%20Effect%204-19-11.pdf ) Which really does make it difficult for upward mobility, particularly for single moms who are most affected.
So, empathy all around! But seriously, no one is saying anyone who is concerned or affected didn't work hard.
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@Amelieisme: Hmmm...I would just like to point out a debt to income ratio. If your household income is 250k and you have 170k in student loans....comepared to me.....our household income is 60k, and we have 65k in student loans.............just saying.......
The tax brackets seem fair to me...
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@krsmall: It's a little misleading to say these are new tax rates Obama is trying to push. It's just letting the Bush tax rates expire and revert to what they were during the Clinton administration.
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A good article about the fiscal cliff:
http://billmoyers.com/content/why-washingtons-fiscal-cliff-is-a-myth/
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@caffeinated: I thought I did say that above?
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@mrbee: I am losing brain cells today. I meant to say that you were correct, and well, i never finished writing that sentence because LO distracted me!
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It just seems like people who don't make that kind of money are OK taxing people who DO make that kind of money at a higher rate...the whole take from the 'rich' and share with the poor kind of mentality.
The implication seems to be, "oh they have plenty of money, if *I* had that kind of money, i wouldn't know what to do with myself!"
And that's a mentality i've seen in other threads, too.
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@caffeinated: Sorry, I used the wrong word, I meant that they will be implementing rates that we have not seen in over 8 years... so they seem "new" to me.. sorry for any confusion
the cable news channels seem so all over the place.
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