Taxing The Rich Won't Result In Obama's Estimated Revenues

According to Barack Obama, eliminating the Bush tax cuts for the rich will produce $850 billion in increased revenues over 10 years.   But, I'm betting that won't even come close to happening.

First of all, the rejiggering of the top two tax brackets will actually result in expanding the middle 28% tax bracket; lowering the rates of many who are currently paying a 33% tax rate.  In the case of those filing as singles, the upper limit of the 28% tax bracket will have to be adjusted from the current $178,650 ceiling to a new ceiling of $199,999.  As a result, all those currently making between $178,651 and $199,999 will see their taxes lowered.  Those married and filing jointly will see the 28% tax ceiling raised from $217,750 to $249,999.  And, marrieds filing separately will see the 28% tax bracket expanded from a current ceiling of $108,725 to $124,999.  So, in a way, there could be a lot of upper middle class taxpayers who will actually see their tax rates lowered.

Then, too, the married but filing separately option will probably become more attractive for many.  Take for example, a family where one income earner is making $120,000 and the other $130,000.  Under the Obama tax scenario, filing jointly would result in a tax bill of 36% or approximately $90,000.   If they filed separately, their total combined tax would be only $70,000; for a savings of $20,000.  Of course, tax advice is essential since some tax deductions are lost when filing separately.  But, if you don't have those deductions, its all gravy.

Lastly, don't expect the rich to just lay down and accept the new Obama tax.  Simply increasing charitable contributions will save many who are close to paying Obama's higher tax.  Businesses may accelerate certain purchases to increase the deductions and keep them in a lower bracket. Investments in tax free bonds will become more popular.  Even buying a Chevy Volt could keep some from paying the higher tax.  Setting up trusts can save thousands in income taxes.  And, I am quite sure the "brains" of those tax consultants are working overtime to find as many ways as possible to save their clients money.  For sure, their business will pickup because the higher amount of taxes being paid will warrant paying their fees.  Also, being forced to buy health insurance for their employees or pay a penalty may actually keep some businesses from having to pay the new, higher Obama tax on the rich.  Ain't that a kick in the Prez's pants!