Tax Lawyer's Blog

The New York Times Jackie Calmes reported yesterday that,

Behind Democrats’ struggle to pay the $1 trillion 10-year cost of President Obama’s promise to overhaul the health care system is their collision with another of his well-known pledges: that 95 percent of Americans “will not see their taxes increase by a single dime” during his term.

Calmes says that even pro-tax liberals like Robert D. Reischauer, a former director of the Congressional Budget Office who heads the Urban Institute, a center-left research group, recognize that taxing only the rich is not a panacea:

[A]nalysts recognize taxing the rich has its limits both economically and politically, such that members of Congress are not likely to tap that well again and again.

Polls show strong majorities supporting higher taxes on those earning more than $250,000 a year, Mr. Obama’s target group. Yet some Congressional Democrats are fearful of Republicans’ attacks that “soak the rich” tax increases will douse small-business owners, too, even if the number of those affected is far less than Republicans suggest.

Democrats have already proposed tax increases on the rich that, if enacted, will result in a top tax rate of 45%, the highest top rate in more than two decades.

And it’s even higher depending on where you live:

But the effective top rate would be higher still, counting the 2.9 percent Medicare payroll tax and state and local income taxes.

In the highest-tax states of Oregon, Hawaii, New Jersey, New York and California, it would be 57 percent, according to the conservative Heritage Foundation.

Imagine making $400,000 and having to fork over $228,000 of it to the government? Ya think that might make you want to start drinking tea?

But then again, look at the bright side. That money could help pay for these essential government projects for the poor:

• $350,000 for the Rock and Roll Hall of Fame in Cleveland; 
• $250,000 for the Country Music Hall of Fame in Nashville; 
• $150,000 for the Grammy Foundation; 
• $250,000 for an Alaska statehood celebration; 
• $25,000 for a mariachi music course in a Nevada school district; 
• $250,000 for sidewalk repairs in Boca Raton, Florida; 
• $1.4 million for upgrades at Ted Stevens International Airport in Alaska; 
• $218,000 to the Port of Brookings Harbor, Oregon for construction of a seafood processing plant; and 
• $100,000 to the City of Rochester, New York for a film festival.

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