The stealth tax hike
The two provisions are the infamous PEP and Pease, which aficionados of stealth tax increases will recognize immediately as relics of the 1990 tax increase. …
Under the new law, some of the steepest tax increases may fall on upper-middle class earners with incomes just above $250,000. …
The Senate Finance Committee informs us that in effect the loss of the personal exemptions, currently $3,800 per family member, can mean a 4.4 percentage point rise in the marginal tax rate for a married couple with two kids and incomes above $250,000. A family with four kids in that income range faces about a six percentage point marginal rate hike. The restored limitations on itemized deductions can raise the tax rate by another one percentage point. …
A store manager married to a dentist with a combined income of, say, $350,000 may pay a higher tax rate under the new law than if the tax code had simply reverted back to the Clinton-era rates that Mr. Obama championed. Those earning more than $450,000 would see their de facto tax rate rise to about 41% under the new law, not 39.6%. Add in the new ObamaCare investment taxes and the tax rate on interest income is close to 45%.
Blowback
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Surprise, surprise, surprise….Not!
ProfShadow on January 5, 2013 at 11:26 AM
How appropriate. Blue staters wanted more Obama, now they get him & all the taxes that come with him! Suck it Obots!!
JAM on January 5, 2013 at 11:29 AM
We knew this day 1 . We figured out that we probably employ 2 people full time each year .
Investments , rental property , maintenance etc . . Not a whole lot but it used to be deductible .
Didn’t make money in a lousy economy and worse housing market but we felt good keeping
people working .
Now we are working on unwinding all of it . We’re just little guys , imagine the big guys and
what this will do to the economy and especially the housing market .
Lucano on January 5, 2013 at 11:46 AM
Shocking that the GOP would agree to a worse deal than the one originally offered.
besser tot als rot on January 5, 2013 at 11:51 AM
What stealth tax hike?
Anyone who didn’t see this coming chose not to see it.
single stack on January 5, 2013 at 1:02 PM
I think this is a mis statement, not typical in the WSJ. Phaseouts under candidate Romney, were in exchange for lowering tax rates. So that the top margin of earners would still be paying the same portion of all taxes…say whatever it is 70%? of all taxes, just simplified.
He was preserving the portion of taxes paid, for now, and looking toward lowering them overall by reducing the entire government spending of GDP…Like from 24-25% under Obama to 18-22% under Ryan/Romney…someday…and Simpson Bowles does something like this too.
Maybe I don’t understand the author?
Fleuries on January 5, 2013 at 1:07 PM