Originally posted by Odysseus
DVPGSR
That is where the problem lies. The less money you make, the greater percent of your total income goes to the govt in one form or another, just for the things that everyone needs: Gas, Driver's liscence, electricity, phone... The taxes on basic necessities of life, make percent based income tax reduction unfair to those with less income.
If you make 20k a year, 45% of your total income may go to the govt, even though you are in a lower income tax bracket. If you make 200k a year, maybe it is 34%
Not true...the top tax bracket is already around 40% for income tax alone. Factor in that if you are in that tax bracket your property taxes are most likely considerably higher, not to mention all of the increased taxes on utilities that you have and you are probably paying over 50% of your pre-tax dollars to taxes. Lets look at an example.
Taken from here
http://www.stamfordadvocate.com/busi...axes-headlines and I am using Single.
A person in the 28% tax bracket making $63,550 a year gets a 5% tax cut dropping them to 23%...they pay $14,617 (rounded to the nearest dollar) a year in taxes...down from $17,794, a savings of $3177 a year. I am currently in this tax bracket and I know with my lifestyle I would love to have another $3177 a year in my pocket. There is a lot I could do with that money.
Now lets look at a person in the 36% tax braket...a place I could conceivably be in the next 5 years. For arguments sake lets say that I am making the top of that tax bracket $288,350 and I too get a 5% tax break. That means I pay $89,389 (rounded to the nearest dollar) a year in taxes...down from $103,806, a savings of $14,417. I know that my lifestyle at that tax bracket could use that $14,417 since I would have larger expenses than I currently do now. I would have a larger house, more expensive cars, higher creditcard debt etc. that the additional money caould go to.
The money you save in each tax bracket would be relative to the lifestyle you live...it also gives you an incentive to work harder and make more. Lowering the lower tax brakets more than the higher ones makes a larger disparity between them...this increases the tax burden on a person as they make more money. You could conceivably have a person at the top of one tax bracket that when they get a raise to bump them into the next bracket they see less after-tax dollars. This would be detrimental to that person and would not be a motivating factor for them to advance more because for the next few years they would actually see less money than they did in the previous tax bracket. This is very key to people that work on commision...why would they work as hard as they know they can and earn what they truly could if the tax benefit is not there? People work hard for their money and I think that more of the money should be given back to them irregardless of which tax bracket they are in.