FYI | Tax Increases are on Their Way
by John Goodman
John Goodman is the president of the National Center for Policy Analysis.
This is from the Joint Economic Committee minority report. Congress is considering legislation that would:
Raise the top two income tax brackets from 33% and 35% to statutory marginal rates of 36% and 39.6%;
Bring back the “hidden tax increases” of PEP (the Personal Exemption Phaseout) and Pease (the limitation on itemized deductions), which raise the effective marginal rates in the top two brackets to 41% for a family of four; and
Create a graduated surtax of 2%, 3% or 5.4% as part of “health reform,” which would raise the marginal tax rate for a family of four in the top two brackets to a range from 43.3% to 46.2%.
Additionally, income distributed as wages to a small business owner would be subject to an extra 2.9% Medicare tax.
All combined, small business owners could be subject to marginal tax rates as high as 49% and data from the Joint Committee on Taxation shows that at least 55% of the revenue raised by increasing the top two rates would come from small business income.
This would not include an average 7% in state and local taxes. It would also not include the House health bill’s wage tax of up to 8% on businesses that do not offer health insurance or do not pay for enough of their employees’ coverage or the 2.5% income tax on individuals who have not purchased health insurance.
