Increasing the tax rate will generate less tax revenue

@bobmnu (8160)
United States
March 7, 2009 1:42am CST
President Obama thinks that by increasing the tax rate he will generate more tax money to run the government. He is wrong and here is why. Take the case of a Doctor who has a practice with 4 other doctors. Each one makes about $300,000 a year in income and bonus. Under the Presidents plan they would pay 40% tax rate on the $50,000 (-$20,000) above $250,000. They would also pay the Social Security tax and Medicare tax on their total salary (now capped at $106,000) This means thy pay (-$24,000). They also lose the Home mortgage interest deduction and the charitable deductions. To earn $50,000 more in income they will pay over $50,000 to the government. The Doctors have a meeting and decide that they will only work four days a week and reduce their salary by 20% ($60,000). This will mean that they will be seeing fewer patients and will need less staff. They cut staff hours by 20% 9government receives 20% less in taxes). These doctors are like everyone who is in that tax bracket of above $250,000 (the wealthy) and they do not want to work and produce more if they are going to lose it all to the government in taxes. Would you want a raise of $100 per week if the government would take $120 more out of your pay check? What happens next is the government needs more tax money so they drop the tax bracket of 40% down to those making over $100,000. Then they simplify the tax code and make the tax rate 5% higher for everyone or they remove deductions from everyone and in effect increase your taxes. Remember the Income tax, when first started, was only gong to tax the the very rich when the average salary was less that $6,000 per year, and you got a $3,000 deduction to start with. The tax would only effect about 5% of the people.
3 responses
@Destiny007 (5820)
• United States
7 Mar 09
Or we can simply look at history, and compare the FDR years to the Reagan years. FDR failed and Reagan succeeded. Reagan cut taxes whereas FDR raised them and had massive spending as well, much in the same manner as we are seeing now with the 0bamunist.
@bobmnu (8160)
• United States
10 Mar 09
He did learn history from Frank Marshal Davis, and he learned of the struggle of the 60 from Bill Aryers and Bernnet Dorn.
• United States
7 Mar 09
I hope people soon start to realize 0bama is wrecking the economy on purpose. 0bama has a serious personality problem that causes him to be incredibly deceptive while trying to appear as a warm, friendly, exceptionally intelligent person. I attribute 0bama's secret hatred of America to the abandonment by his father and mother and most especially, his years of spending hours daily with his teen age mentor, Frank Marshal Davis. People should look up Frank Marshal Davis and then talk confidentially to an experienced mental health professional to find out what it does to youth to be involved with someone like Frank Marshal Davis for years while still very young. What is wrong with 0bama at his core is becoming apparent.
@bobmnu (8160)
• United States
10 Mar 09
I think he buys into the fact that the wealthy got rich by sealing it from the poor and he sees his job is to get it back for them. He does not see the failure of the Great Society or the War on Poverty both of which cost us over 40 trillion dollars and we have more people in poverty now than back them. The difference is as the rest of the economy has grown they have benefited and are living better than before. They increase their standard of living as everyone else raises their standard of living. When people choose not to change their life will not get better, no matter how much money the government gives them.
@clorissa123 (4930)
• United States
7 Mar 09
Pretty sucks as you exemplify this concept above. Does Obama propose to do so, and so the government would gain more money on hand from us? I definitely need some extra cash instead of losing them to the government.