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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: combjelly who wrote (586216)	9/24/2010 6:25:15 PM
From: TimF	Read Replies (1) \| Respond to of 1572508

Plus or minus 3 percent can be an important factor in business. And its not just 3 percent, its almost 40% (or really over when you consider phase outs of certain deductions), plus state and local taxes that can bring it to over 50% (you can deduct for those but you forgo other deductions, and you can't cut out 100% of what you pay. You deduct the state and local taxes paid from your taxable income, but that saves you the federal rates % of what you pay to the state and local governments, not the whole amount you pay. ---- nder the president’s proposal, the top bracket will rise to 39.6 percent. A stealth provision that phases out high-income taxpayers’ itemized deductions will also be reinstated, adding another 1.2 percentage points to the effective tax rate, bringing it to 40.8 percent. Wages and some of the pass-through income will also remain subject to a 2.9 percent Medicare tax. These 40.8 and 43.7 percent tax rates, which will apply in 2011 and 2012, match the 1994 to 2000 rates—the same top bracket, stealth provision, and Medicare tax were in place then. But the picture changes in 2013. Under the healthcare law adopted in March, the Medicare tax will rise that year, from 2.9 to 3.8 percent. Also, a new 3.8 percent tax, called the Unearned Income Medicare Contribution (UIMC), will be imposed on high-income taxpayers’ interest income and most of their pass-through business income that’s not subject to Medicare tax. So, under the president’s proposal, virtually all of top earners’ ordinary income will be taxed at 44.6 percent, starting in 2013. american.com So start (in 2013) with 44.6, then add state and local taxes. For CA the top rate is 10.55, so you get a total of 55.15% (plus local income taxes if any). For New Jersey you get a tax rate of 8.97 for a combined rate of 53.57. For New York City you pay federal and NY state taxes (7.85%) for combined rate of 52.45, plus a city income tax of 3.648% for a total of 56.098%. In Hawaii (assuming no local income taxes) the top combined rate will be 55.6%. In Iowa it will be 53.58. In Oregon 55.6%. In VT 53.55%. In DC 53.1%. In Rhode Island 54.5%. That isn't a full list of the above 50% states. Its complicated by the fact that you can deduct state income tax paid from your federal return, but if you do so you have to give up deducting sales taxes and also you don't save the full amount. Lets look at the highest example I gave above. New York City. The state and local income tax combine to 11.498%. You only save 39.6% of that or 4.553208%. So if you give up deducting the large New York sales taxes, you still pay a rate of 51.544792% on income taxes alone. ----- You don't not hire because of the 3%, you don't hire (or make some other investment) because of the 50%. It doesn't happen all at once with some specific percentage all the sudden causing almost everyone to change their behavior when no one did before, it happens at the margin as taxes increase. Some specific group of people will be at the margin for this specific increase, just as some other people would be at the margin for the next increase if it happens. As the post-tax real risk adjusted return of any investment (including the investment of hiring a new employee) goes down, then the amount of that investment goes down.