8/24/2023 0 Comments 2017 us federal tax brackets![]() Whom would it affect? According to the Internal Revenue Service, 438,000 tax filers had more than $1 million in taxable income in 2015, most of whom also make more than $1.2 million-meaning they’d pay the full additional $12,420 in bubble tax. Balancing out those costs means that the bill can pass through budget reconciliation, and Senate Democrats can’t filibuster the bill. This type of tax is sometimes called a “bubble tax,” because the marginal tax rate effectively bubbles up for a brief period before falling back to a lower level.Īccording to POLITICO’s calculation, the surcharge could raise more than $50 billion over a decade-money that will help the GOP meet the $1.5 trillion in increased deficits that their budget allows for and required to balance out tax cuts elsewhere. At that point, the surcharge disappears and the top tax rate drops back to 39.6 percent. That surcharge remains until the government has clawed back the full $12,420, which would occur at about $1.2 million in taxable income. Here’s how it would work: After the first $1 million in taxable income, the government would impose a 6 percent surcharge on every dollar earned, until it made up for the tax benefits that the rich receive from the low tax rate on that first $45,000. But in the new plan, House Republicans want to claw back some of that benefit for individuals who earn more than $1 million, or couples earning more than $1.2 million. That’s a normal feature of current American tax law. Under the House GOP plan, all individuals-no matter whether they earn $35,000, $150,000 or $10 million-would pay the lowest rate, 12 percent, on their first $45,000 in taxable income. The new rate stems from a provision in the bill intended to help the government recover, from the very wealthy, some of the benefits that lower-income taxpayers enjoy. “I was just in a briefing with the White House on this,” he said. Reached by phone, Steve Moore, a tax expert at The Heritage Foundation, said the surcharge was news to him. And it goes against decades of GOP orthodoxy that raising taxes on the rich discourages work and reduces economic growth. It hasn’t been advertised by Republicans, who have described their plan as maintaining the current top tax rate of 39.6 percent. ![]() Thanks to a quirky proposed surcharge, Americans who earn more than $1 million in taxable income would trigger an extra 6 percent tax on the next $200,000 they earn-a complicated change that effectively creates a new, unannounced tax bracket of 45.6 percent. But a little-noticed provision effectively creates a new band in which income is taxed at over 45 percent. ![]() House Republicans claim the tax plan they introduced Thursday keeps the top individual rate unchanged at 39.6 percent-the level at which it’s been capped for much of the past quarter-century.
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