Thursday, November 8, 2007

Time out...let's talk about federal taxes for a moment

You gotta see this bill. Some of you have heard about Charlie Rangel's bill, commonly referred to as "The Mother of All Tax Hikes." Here is the text from a letter by Ways and Means ranking member, Jim McCrery dated October 25.

"At a bipartisan Ways and Means caucus last night, Chairman Rangel outlined his long-awaited “Mother of All Tax Hikes” legislation. The basics of the package are simple: This is the largest individual income tax increase in history.
The bill will add a 4% surtax on Americans earning more than $150,000 a year ($200,000 for couples). So, under Democrats’ plan, over the next few years, the individual income top tax rate in the United States will rise from 35% to 44%. By way of comparison, the other 29 Organization for Economic Co-operation and Development countries – basically other developed nations - have an average top marginal tax rate of 35.7%. In fact, only five OECD countries would have higher top marginal tax rates in 2011 than the United States if the Democrats’ bill is enacted.
This crushingly high tax rate will affect approximately 10 million taxpayers directly - including those who report business income, like small business owners and farmers - but the damage will ripple throughout our economy. Because small businesses and family farms often pay their income taxes as individuals, this is a massive tax hike on the engine that drives job growth in this country.
In addition, the surtax is on adjusted gross income, not taxable income. This sounds like a technical issue, but it means that Rangel’s bill will erode the value of a series of tax deductions – including for mortgage interest, charitable giving, medical expenses, state and local taxes, and the standard deduction. And, because the surtax kicks in at $150,000 for individuals and $200,000 for couples, the bill creates a monster of a marriage penalty."

Well, now it appears the Dems in Washington are trying something new. A big tax hike with a bunch of "offsets" or incentives to get members of Congress to vote for it. Read about it here, if you like.

Bottom line is it just makes the tax code that much more confusing and burdensome. The United States, bastion of freedom, home of the Boston Tea Party, is sinking into the mire while countries like...can I say it...France! outperform us on tax rates.

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