Business & Finance Finance

Fiscal Cliff

So for marginal rates here is where we stand. In 2010 Obama extended the Bush tax cuts and yes this year they are up again. So here is the actual data:

wealthiest - 39.6% is currently at 35%

2nd wealthiest - 36% to 31%

middle class - 28% to 25%

poor - 15% to two groups (15% for the poor and 10% for the really poor)

So yes, I don't mind the wealthiest paying more at 39.6%, but realize of course they are currently paying way more technically. And as you can see the poor pay almost nothing. In fact after deductions and such 47% pay no income tax. The rich of course just like the middle class also have the ability to deduct and credit enough to help realize their actual rate which in most cases is significantly more. In fact I'm in the middle class and my effective rate because of all the wonderful credits and deductions went down from 25% to 18%. The problem I see is that there needs to be some type of cap for all whom deduct because in the end the rich do benefit.

That is difficult for me to say because I'm very conservative and believe you shouldn't touch what people have earned. The rich do benefit from the system more. Let me explain with one example. If three individual's purchase a house worth 100k, one guy makes 500k a year, one makes 100k and the other 20k and the mortgage was for 30 years @ 3%, the rich guys makes out with the mortgage deduction. Each person pays $250 of interest to the bank. The wealthy guy is in the 35% tax bracket and would get $87.50 back from the IRS. (Although if you can do math he should just pay off the mortgage and not pay $250 to get 87.50 back, but that isn't the point of this example ) The middle class guy is in the 25% tax bracket and would get back $62.72 back from the IRS. The poor guy is in the 10% tax bracket and would get back $25. So as you can see the rich benefit from the marginal rate. Of course they also benefit from the effective rate, but I'm not going to get into that right now.

Romans 13:8 €Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.€

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