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Mon Dec 3, 2012, 01:10 PM

Maybe We're Going About This the Wrong Way...

I'm starting to think that $250,000 is too low, and it should be $500,000. There are Dual income families that bring in $250,000 but they are upper middle class. Not "rich". Moreover, somehow, Mitt Romney paid 15% on his taxes, not 35%. Or 39%. So I'm concerned that we are going about this the wrong way. We need to put caps on things like long term and short term capital gains taxes and dividend taxes, so that they are taxed fairly above $250,000 - changing the tax rate on income above 250K is not sufficient. In fact, we need to look at all the ways in which Mitt Romney ended up paying 15% instead of 30%+ percent, and we need to address those things.

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Response to qwlauren35 (Original post)

Mon Dec 3, 2012, 03:30 PM

1. What about the first $250K for individuals, the first $350K for childless couples...

...and the first $500K for families not being subject to increased taxation?

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Response to qwlauren35 (Original post)

Mon Dec 3, 2012, 03:49 PM

2. Chuck Schumer and Dianne Feinstein suggested increasing the cap to $1 million? Why?

Because the cost of living is so high in CA and NY that a family making $250,000 could be hurt. I totally understand what they're getting at. I still think $1 million is too high. $500,000 sounds reasonable, but again, only the second $250,000 would be taxed, not the initial $250,000. Therefore, even wealthier Americans make out, since only income beyond $250,000 is taxed.

I'm torn on this issue. I live in Maryland where the COLA is incredibly high but income levels are also competitive. So I understand that argument.

However, the majority of Americans earn far less than $250,000, so again, I understand the arguments on both sides.

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Response to qwlauren35 (Original post)

Mon Dec 3, 2012, 04:19 PM

3. Can somebody point me in the direction of jobs that pay $125-250K?



and what does that make my wife and I earning around $70K? Are we considered poor here in Indiana?

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Response to Proud Liberal Dem (Reply #3)

Mon Dec 3, 2012, 04:22 PM

4. In Indiana, no

But in New York City, 2 people living on a combined $70,000 would be solidly middle class. Probably enough to afford a 1 bedroom apartment...2 bedrooms would be a stretch.

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Response to democrattotheend (Reply #4)

Mon Dec 3, 2012, 04:26 PM

5. Yikes!

Note to self: don't live and work in NYC, esp. not Social Work

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Response to democrattotheend (Reply #4)

Mon Dec 3, 2012, 05:53 PM

12. Even one bedroom would be a stretch on 70K.

A nice 600 square foot studio with a bed alcove would now go for about 400K in a nice but not stylish neighborhood in Manhattan.

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Response to Squinch (Reply #12)

Mon Dec 3, 2012, 06:02 PM

13. Probably true, if you are looking to own

I was thinking in terms of what one could afford to rent.

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Response to qwlauren35 (Original post)

Mon Dec 3, 2012, 04:43 PM

6. In the first place do we know what President Obama's specific tax increases are? I ask this

because 2 years ago in addition to raising the rates for the top 2 brackets he proposed keeping the 15% capital gains/dividends for low income earners (below $ 200,000 / $ 250,000) while increasing it to a max of 20% of those above the income thresholds.

I think the threshold amounts should be $ 250,000 (single) and $ 500, 000 (joint).
The current rates are 10%, 15%,25%, 28%, 33%,and 35%.
Keep rates the same except for the top two : change to 35% and 37%.

Long term Capital Gains : currently those in the 10 or 15% bracket capital gains is at 0.
Scheduled to increase to 20% in 2013. The president , i believe, has called for the 0 and 15% tax rates to be extended to those in the 10% - 28% tax brackets with 20% for those in the top 2 brackets.

Not sure where to go with this. Agree with the president. The only thing here is that because Mr. Romney's dividend/capital gain income was larger than his taxable income he was able to pay NO taxes on the first $ 68,000 -- this has to be corrected.

Dividends: currently qualified dividends are taxed at max 15%. Those in the 10 and 15% brackets pay zero tax. Expiration of bush tax cuts dividends are taxed at regular tax rates.
Again, the president, i believe,has called for the similar idea like the capital gains. 0 and 15% for those in
the 10 - 28% tax brackets while the top 2 brackets pay a max of 20%.
Would like to see these rates go even higher but understand a big increase is questionable.

Which leads me to ponder this: if the president is only proposing CG/Dividend rates to go up only 5% why would the Rs even consider to let the bush tax cuts expire when dividends will be taxed at regular rates?

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Response to qwlauren35 (Original post)

Mon Dec 3, 2012, 04:46 PM

7. I assume that's $250,000 in taxable income

Which is different (and lower) than one's gross pay. And I think $250K has been a "placeholder" number because right now, the top rate (for Married Filing Jointly) kicks in at $388K. Maybe $250K is just a number that's easier to remember than $388K.

In any case, if your taxable income is above $388K, chances are that with deferred income (i.e., a 401(k) plan) and itemized deductions, you really would have annual gross income approaching $500K.

I agree that capital gains need to be part of the conversation, as well. Dividends are (mostly) taxed as ordinary income -- as with all things tax-related, there are exceptions to that.

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Response to qwlauren35 (Original post)

Mon Dec 3, 2012, 05:01 PM

8. And don't forget that the rate on the first $250,000 DOES NOT change. It's the incremental rate for

income above $250,000.

So someone making $275,000 would pay the lower rate for the first $250,000, and the higher rate only on the last $25,000. Not going to break anyone.

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Response to Squinch (Reply #8)

Mon Dec 3, 2012, 05:14 PM

10. Exactly. It's silly to parse these levels. It's not about the 250K, it's about TAXING MILLIONAIRES

....FAIRLY! Folks that make millions, multi-millions...billions. They need to step up.

If someone makes 275k or 500k, they get a BIG tax cut...everything up to 250k. That's big enough for them.

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Response to qwlauren35 (Original post)

Mon Dec 3, 2012, 05:12 PM

9. The president ran on the idea of increasing taxes on those who make $250k or above.

He didn't mince words or leave room for debate. He didn't obfuscate the issue as republicans always do.

The majority of the people are on board with the president's vision. He needs to hold firm.

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Response to qwlauren35 (Original post)

Mon Dec 3, 2012, 05:24 PM

11. We are... I'd raise taxes on anyone making more than $100k a year. nt

 

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Response to qwlauren35 (Original post)

Mon Dec 3, 2012, 07:34 PM

14. As someone lucky enough to be in that tax bracket this year,

I can assure you that $250,000 is not too low.

Indeed, if you think $250,000 is too low, then why is $500,000 not too low? Have you read Bonfire of the Vanities? There are people out there who are "struggling" on $2 million.

Anybody who is having trouble making ends meet on $250,000 or more needs to learn a few things about personal finance.

The Bush tax cuts were never meant to be permanent. I want to pay more in taxes. Anyone who is lucky enough to be making that much money should be happy to give some of it back to the society that made it all possible.

P.S. The tax bracket I am referring to is a dual income of a little over $250,000.

ETA: I find it obscene to see people worrying about those making over $250,000, when there are people making less than $8 an hour after several years of working at fast-food restaurants in NYC.

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Response to qwlauren35 (Original post)

Mon Dec 3, 2012, 07:41 PM

15. Hardly middle class

250K is no middle class by any reasonable classification. Such an annual income would put you well into the top 10% of American households. Whether or not that makes one "rich" is obviously a slightly more difficult question. And it certainly wouldn't automatically make one "independently wealthy". But one must consider that they are not exactly "poor" if they have this kind of income.

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