Uncle Sam is coming after your savings

Why target a tax benefit that goes to a lot of your supporters (and donors), that tickles one of the sweetest spots in American politics (subsidizing higher education), and that will hit a lot of people who make less than the $250,000 a year that has become the administration’s de facto definition of “rich”? 

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Presumably, because you’re running out of other places to get the money. The top tax rate on people who make more than $413,000 ($464,000 for married couples) is already almost 40 percent. That’s on top of Medicare taxes (2.9 percent, not capped), Social Security taxes, state and local taxes (in a deep blue area like New York City, these can amount to 10 percent, though you get some of that back by deducting state taxes from your federal tax) — a marginal tax rate of around 45 to 50 percent in blue states, and possibly even more if you run a business.

Capital gains are taxed at a lower rate, of course. But if you combine the Obamacare capital income surcharge for higher earners, and the administration’s new proposal to raise the base rate to 28 percent, you’re looking at a capital gains tax of almost 32 percent for people who make more than $200,000 a year ($250,000 for married couples). We are simply running out of room to pay for generous new programs with higher taxes on the small handful of people who make many hundreds of thousands of dollars a year.

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