Make over $150K? Rangel’s Gunning for You
Rep. Charles Rangel (D, NY), Chairman of the House Ways and Means Committee is looking to overhaul the current tax system. He’s got all sorts of ideas, summarized in this story (or this PDF summary), but I just want to point out to one portion:
Middle and upper-middle income families would benefit under the plan by a repeal of the alternative minimum tax starting Jan. 1, 2008.
Upper-income families, however, would pay for that repeal with a 4% surtax on incomes above $150,000 for a single earner or incomes above $200,000 for a married couple. That surtax would grow to 4.6% for incomes above $500,000.
The surtax will also make possible an expansion of the earned income tax credit, an increase in the standard deduction, and an increase in the value of the child tax credit for those earning too little to owe federal income taxes.
If this surtax came to pass, I can hear the conversations now? “Hey boss, I’m thinking that I’d be happy making $149,999 this year, how’s that sound?” I guess another solution would be for everyone looking to make $150K could shoot for $156.5K to roughly offset the new “surtax.” Then again, we all know that people don’t modify their financial decisions based on tax policy, so I’m sure that the numbers will all work out based on static economic models (ahem).
UPDATE: Andrew makes a great point in the comments:
I just did a couple of back-of-the-envelope calculations…
1. Statistics show that the average married couple in America involves 2 people. I think that’s why they’re called “couples”.
2. $150,000 times 2 equals $300,000
So a married couple has to pay the surtax on $200,000 of total income, while an unmarried couple doesn’t have to start paying the tax unitl $300,000.
Doesn’t this take the marriage penalty to new heights, and beg the question of why the government is so hostile to married people?