american ignorance on how our tax system works

i detected this same ignorance in some of the righties on et in debates before the election:

For whatever reason, an article titled "Investors Rush to Beat Threat of Higher Taxes" was published by The New York Times despite the fact that it contains a galling bit of stupidity, which could spread like a supervirus to the general public.

It is these three paragraphs in particular:

Kristina Collins, a chiropractor in McLean, Va., said she and her husband planned to closely monitor the business income from their joint practice to avoid crossing the income threshold for higher taxes outlined by President Obama on earnings above $200,000 for individuals and $250,000 for couples.
Ms. Collins said she felt torn by being near the cutoff line and disappointed that federal tax policy was providing a disincentive to keep expanding a business she founded in 1998.

“If we’re really close and it’s near the end-year, maybe we’ll just close down for a while and go on vacation,” she said.


This is a stupidity as persistent as it is avoidable. Ms. Collins, chiropractor from Virginia, is among the many people of affluence who have somehow survived without understanding how marginal tax rates work. As always, I am obligated to provide the following paragraph from Dean Baker's post, "Marginal Tax Rates: How To Explain Them To A Five-Year-Old Child" (not its actual title, but still):

The tax system brackets give marginal rates. This means that if the raise bumps you into a higher bracket then you pay more taxes only on the income in the higher bracket. Suppose that the tax bracket for income under $200k is 25 percent, and for income over $200k is 33 percent. If you get a raise that pushes your income from $195,000 to $205,000 then you only pay the higher 33 percent tax rate on the $5,000 that is above the $200k threshold not your whole income. Therefore, there is no (as in none, nada, not any) way that getting more money, and being pushed into a higher tax bracket will leave you with less money after taxes.

http://www.huffingtonpost.com/2012/11/20/new-york-times-tax-rates_n_2166967.html

 

The stupidity is in the thinking that if we give them more money that somehow, by a miraculous event never before seen in the history of man, the government will suddenly become more efficient, will spend less, and not be coming back hat in hand next year asking for more. At what point do we tell these criminals in congress that they have to work with what they have stolen from us already and the game is over?

 

sounds like you had a "wow i didnt know that" moment so you threw out a red herring just to make yourself feel good.

 

I understand the tax system pretty well and think it's ridiculous how unfair it is. The top rate in the late 80's was 28%. Why should anybody have to pay more than that? Get rid of all the loopholes, including the mortgage deduction.

 

the top rate in the 50s was 91%. sounds like its pretty low now.

 

Krugman was chanting this the other day. That would never work today and we didn't take in a lot of revenue back then. Anybody who made that kind of money hid it or found some type of loophole. If we raised the rates to 91% today anybody who makes a lot of money would leave.

 

C.O.the government will suddenly become more efficient, will spend less, and not be coming back hat in hand next year asking for more.

They come back all right but not hat in hand.

 

still what we pay now is very low compared to then. plus with increased standard deduction these days you have to have a pretty good income to even reach 28% of your total income.

 

Before WWI nobody paid income tax at all. Why should people be giving half of their income to the government? There comes a point where enough is enough. Considering a significant amount of people pay no income tax it doesn't make sense to be charging anybody 39.6% for a dollar earned.

 

The loopholes are in use today. Which might explain your comment about eliminating them. You don't get to have it both ways.