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Tag Archives: Medicare

Dems Say They Just Want to Go Back to pre-Bush Tax Rates. Don’t Be Fooled.

For years now, Democrats have been lobbying to have the current tax rates pushed back up to where they were before Bush II cut the rates.  The top marginal rate, now 35%, would go up to 39.6% for individuals earning more than $200,000 per year and families earning more than $250,000 per year.  Claims such as the rich need to pay their “fair share” (a term that is an undefined value, but effective in getting folks riled up), or that the rich have benefitted for long enough and need to pay up, are always used to try and bolster the argument.  I support the idea of raising the marginal rates for EVERYONE to where they were before the Bush tax rate cuts, and have said so many times.  But I discovered that, under further review, Democrats are attempting to go even further in their quest to turn high income earners into bigger cash cows for the government.

What most people don’t realize–and Dems aren’t going to hip folks to it–is that once the healthcare reform plan (“Obamacare”) goes into full effect, the tax rates for $200k/$250k earners will be more than they were pre-Bush.  How?  I’m glad you asked.

Baked into Obamacare are a number of tax rate increases designed to raise revenue to pay for the bill.  The number of taxes built in varies depending on which source you use, but there were two that jumped out at me.

First, there is a new 3.8% surtax on investment income for the over $200k/$250k crowd.  Currently, the tax rate on capital gains (profit made from an investment) and dividends (cash received for owning stock in a company) is at 15%.  The new surtax will push that rate up to 18.3%.  When the argument is made to go back up to the pre-Bush rate, which was 20%, there is no mention of the surtax.  If Democrats have their way, the rate for capital gains and dividends would be at least 23.5%.

Next, there is the 0.9% Medicare surtax, also for the $200k/$250k people.  Currently, 1.45% of everyone’s income is deducted to pay for Medicare.  Unlike Social Security, there is no cap on taxable income, so everything the person makes in income is taxed at the 1.45% rate.  However, with the new surtax, income over the $200k/$250k threshold will see a 0.9% tax increase, making the new tax rate 2.35%.  Instead of raising the top rate 4.6% to get it back to pre-Bush levels, the increase would actually be 5.5%.

A different discussion for another day is the laundry list of other taxes built in, such as the tanning tax, the medical device tax, the health insurers tax, ect.  The bottom line is, these taxes make the “we just want to go back to pre-Bush rates” argument nothing more than political foolery.  And, as usual, most of the masses fall for it.

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Clark Howard Nails It: The Country is “Sailing Up Denial” About Taxing Our Way Out of Debt

I happened to hear Clark Howard on the radio while driving back to the office from a business event.  For those that don’t know, Clark Howard (like Dave Ramsey) is a consumer guru known for giving out advice and tips to the masses via his radio and TV programs.  During his program today, he mentioned that the country as a whole was “sailing up denial” when it comes to solutions to fix the country’s long-term debt issues.  While I will still be more of a fan of the saying “denial is a river in Egypt,” Howard definitely nailed the thought process that currently occupies the minds of many Americans–that increasing taxes on the top earners, without making cuts to Social Security, Medicare, and Medicaid, is a viable option for debt reduction over the long term.

The fact that a poll was taken on this subject is quite humorous.  There are a couple of ideas that rule the hearts and minds of many Americans.  The first is that they wouldn’t support the reduction of government benefit programs, knowing they would be affected by the reductions.  Seems to be the simple law of self preservation to me.  The second is that people feel if a person is rich (or seems that way) then regardless of whether or not they actually paid into a benefit, they have money and can do without the government entitlements.  These thoughts reflect, as Howard also stated, that in America, we don’t have a notion of shared sacrifice on the issue.  “Don’t change MY stuff, just make the rich fund it.”  Tricky thing is, as Howard explained, you could tax the upper 1%-2% of income earners all the way to destitution, and the debt problem still wouldn’t be solved.  Further–and I thought this was spot on–if the solution used was more taxes with no benefits cuts, eventually there wouldn’t be enough money coming into the government to pay for benefits.  Before long, individuals would find themselves solely responsible for their own welfare and wellbeing, just like in the old days.  One can only imagine the outcry THAT would produce.

Here’s to hoping that Congress gets it right for a change and puts the sacrifice on everyone, not just a few people.