Do You Know How Our Tax System Works?
Yes, I’m genuinely asking.
Because after reading stories like this, I think a lot of people believe that tax brackets are things that you fall into and then ALL of your income is taxed at that rate.
This is obviously not true because that system wouldn’t make ANY sense, but ABC apparently found some wealthy people who think it does.
Here’s one such case…
A 63-year-old attorney based in Lafayette, La., who asked not to be named, told ABCNews.com that she plans to cut back on her business to get her annual income under the quarter million mark should the Obama tax plan be passed by Congress and become law. …
“We are going to try to figure out how to make our income $249,999.00,” she said.
“We have to find a way out where we can make just what we need to just under the line so we can benefit from Obama’s tax plan,” she added. “Why kill yourself working if you’re going to give it all away to people who aren’t working as hard?”
The attorney says that in order to decrease her income she’ll have to let go of clients, some of whom she’s been counseling for more than a decade.
“This means I’ll have to tell some of my clients we can’t help them and being more selective in general about who we help,” she said. “I hate to do it.”
First, let’s just state the obvious…if this woman actually turns clients away she is remarkably dumb. Because all she’d be paying is another 3 cents on the dollar for the income she earns over $250K.
The math on this is easy. Let’s just say she makes an additional $250K and her total income is $500K. Do you know what she’s paying right now on that $250K? $90,000. Do you know what she’d be paying with the 3% hike? $97,500. So she’d have to pay another $7,500.
My challenge to you…ask the people you know if they understand how the progressive taxation system works. Seriously. Please ask folks. Because after asking a lot of people I know (and these are smart people) I found that at least 50% of them thought that tax brackets were things that ALL of your income fell into.
Long story short, we can no longer afford for people to be so uninformed about our tax system. Everybody should know how this stuff works and I hope you do your part to make sure that happens.