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Subject:  Re: The Fiscal Cliff-Solving the wrong problem Date:  11/14/2012  5:07 PM
Author:  markr33 Number:  408518 of 536530

I thought it was Obama's proposal to raise rates back to the Clinton era number of 39% for people earning over $250K , but not on lower earnings because of the deflationary impact of raising taxes on middle class wage earners:

No. The Obama proposal is to allow all the tax cuts in the 2001 and 2003 and 2010 tax laws to expire for "the rich". That tax law comprised MUCH more than simply a 39.6% top rate instead of a 35% top rate. There were also all sorts of complex limits on deductions and exemptions that caused effective top marginal rates to vary as income rose or fell. In addition, the mix of income, ordinary and long-term capital gains and dividends, causes the effective rate to change dramatically. Add to that changes in AMT rules and you further change effective tax rates. Add to that the resurgence of the "marriage penalty" and effective rate changes yet again.

In addition to all that, the ACA is also a tax bill that changes marginal rates on various kinds of income at various income levels.

All of the above is what comprises the Obama proposal for "the rich" - currently defines at >$250k, but apparently up for negotiation.

But the news media, because of the complexity of the issue, only reports on the top marginal rates.
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