Friday, August 19, 2016

The Effect of Taxes

The media is not talking much about what the two candidates are promising for income tax changes. They don’t offer much detail, and they don’t say how the changes offered by either candidate will affect taxes paid by average working class Americans.

Trump, we hear, proposes to change the brackets and have only three tax rates of 10%, 20% and 25% with increase in the standard deduction to $25,000 for single filers and $50,000 for married couples. The media stresses that such a scheme would result in the rich paying lower taxes.

Clinton says that she will add a new rate at the top, percentage unspecified, which the media quotes her repeatedly as saying will, “finally make the rich pay their fair share for a change.”

Trump doesn’t say what the wage brackets are for his three rates, but since under the current tax plan the 10% bracket tops out at a mere $9275, there is no 20% bracket and the boundary at which we begin paying 25% is below average wage of $39,156, it’s safe to say that income on which you are now paying 15% will be taxed at 10% and income on which you are paying 25% tax will be taxed at either 10% or 20%. Not to mention that the standard deduction, for the 82% of people making average wage who do not itemize, is quadrupled.

In other words, Trump’s proposal will significantly reduce the tax liability for average working class men and women. The media carefully does not point that out.

Clinton’s proposal does not change the taxes paid by the working class, but does raise taxes paid by the rich by some unspecified amount. The media, then, is persuading working class voters to reject a tax reduction for themselves in favor of a tax increase to punish the rich. What kind of sense does that make? How does the working class benefit from making the rich just a tiny bit less rich?

They would, perhaps, rather feel good about kicking someone else’s ass than having some extra income for themselves? Have we really deteriorated to that?

1 comment:

  1. bruce9:02 AM

    because many people are sound bite voters and don't analyze things for themselves.

    And 'taxing the rich' sounds good, also to the Sanders supporters, and you don't really have to specify what those taxes are.

    And Ms. Clinton is pretty rich herself, do you think she's going to tax herself? Not likely. Besides she has a phalanx of accountants and lawyers for everything. So does Trump, but the point is still there.

    BTW, Mr. Trump not releasing his taxes is his business, not really anyone else's. And it is likely he has a complicated tax return, so it may well be non-publishable. Or not understandable. To the common voters anyway, all they see /hear is maybe he's hiding something. Or so the liberals want you to think.

    It's all smoke and mirrors, except no one is actually looking at themselves in a mirror.