Right now, the lowest rate is 10% - for married people filing jointly who make less than $17,400. That rate will go to 15%. Wait a minute - that's a 50% increase - on couples who make less than $17,400! They can't be serious.
The next bracket up is 15% - for married people filing jointly who make more than $17,400 but less than $70,700. (That's a pretty wide range - a big spread between 17,400 and 70,700. Also, why can't they make it easier and just call it $14K or $70K?) That rate will jump to 28%. That's an 87% increase. Yes, 87%. Wow! If you are in that bracket you are about to get hammered. With a capital H.
The next two brackets, 25% and 28% will jump to 31% and 36% which represents an increase of 24% and 29%. These rates are for married people filing jointly with net taxable incomes of $70,701 to $142,700 and $142,701 to $217,450. Don't get me wrong, a 24% or 29% increase is bad, but it's not as bad as 50% or 87%. Not by a long shot.
Currently there are two more brackets, 33% and 35%. Currently these are for married people filing jointly with net taxable incomes of $217,451 to $388,350 and anything over $388,351. These two brackets will become the one top bracket of 39.6%. (Why not just make it 40% or 39%?) This represents the smallest increase - 20% and 13%.
I have absolutely no idea whether the net taxable income levels associated with these brackets will change. Hopefully they will. There is a great deal of talk about making the top level applicable to people with incomes in excess of $250K. Right now it is $217,451.
Apparently this is about to befall us because the so called "super committee" couldn't come to terms. A pox on all their houses!
But in reality, we can't continue to run at a deficit. After WWII the top bracket went to 94% to pay for the war. We don't have the will or discipline to do something like that now. I'll be the first to admit that I don't have the answers. I don't know what should happen. I sure don't want to pay higher taxes. No one does. (But seriously, 0% on capital gains probably isn't enough, although I'm personally quite happy with it.) But I think these "new" rates are what we paid before George W. Bush became president. Since these tax cuts have been in effect for over 10 years perhaps we've been spoiled.
But I think the really big issue is that EVERYONE believes that the government squanders the money. I know I believe it. Don't know anyone who doesn't believe that. Giving money to government is like sending a six year old kid into the store to buy school supplies and being surprised (and disappointed) when he comes out with candy instead. Our elected officials have no idea how to prioritize. And no one agrees how the money should be spent. I personally don't like spending billions on foreign aid to people who want to kill us, particularly when we don't have enough to take care of our own people. I believe in generosity. It is a principle of my Christian faith. But charity is the role of the church and other humanitarian relief organizations, not of government. (Which is NOT to say that government should not provide a safety net for its citizens. Indeed, it should.)
I'm really surprised that the people in the top brackets are whining the loudest. After all, they're getting the smallest increase. But they're threatening to take their money and leave if anyone tries to increase their taxes. I'm not sure where they're going. But I'm sure it won't be anywhere in Europe.
As for me, I plan to render unto Caesar. But I'll be meeting with my CPA soon to ensure that rendering is kept to a minimum.
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