Congress has once again waited until the last minute to pass a tax law which has supposedly saved us from falling off a fiscal cliff. And it is supposed to get the wealthy to pay more of the burden. Since we have a new law, I should mention it here and will probably mention in a couple of future posts as well, but right now I want to point out who really gets to pay more taxes. There are some increases on the wealthy, but the fact is that there is pretty much nobody who will not suffer an increase. I thought it would be a good idea to take a look at how those of us with normal incomes will fare with the new tax law. Here are a few illustrations from the Tax Policy Center.
1. Single Unemployed person with an Income of under $10,000. You will pay taxes at a rate of 6.9%. This is a 20.9% increase in your taxes.
2. College Student with income of $10,000 to $20,000. You will pay a rate of 6.4%. This is a 14.7% increase.
3. Lower income working couple with an income from $20,000 to $30,000. You will pay only 1.3% of your income in federal taxes. But this is a 446% increase. Yes, really. This is an income level which has generally paid nearly no taxes.
4. Retiree with $30,000 to $40,000 income. You will pay 40%. That is up 5.1%.
5. Higher income earner making about $150,000. You will pay about 22% in taxes which is up about 6.5%
6. High income family making $350,000. Your tax rate will be 25.6% which is an increase of about 3.9%.
7. Very High income with income above $1 million. The tax rate is 38.50 providing a 15.5% increase in taxes.
So what we see is that the very rich get a hefty increase and it will no doubt be a lot of money to those individuals. But those of us at all income levels will suffer an increase and despite the rhetoric, those of us hit hardest from a percentage viewpoint are those of us in the lower income brackets.
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