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MONDAY, NOVEMBER 23, 2009
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4

Incomes Under $400K May Dodge Brunt of Tax Hike

AMT still higher

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(Newser) – If your income is in the $200,000-400,000 range, and you’ve been fretting over Barack Obama’s proposed tax hikes, relax; odds are decent you won’t wind up paying more. Obama’s plan does indeed jack up the rates on those tax brackets, but for many those increases won’t take their federal taxes above the Alternative Minimum Tax level they’ve been paying for years, the New York Times reports.

Those in the upper income echelons must calculate both their normal federal taxes, and their AMT, then pay whichever is higher. For the modestly wealthy, the AMT will likely remain higher, or extremely close. The tax hike will really hit those making much more. Especially hard hit will be the Wall Street honchos who’ve been paying the 15% capital gains tax on most of their income. They’ll now have to pay new 39.6% standard rate.

Looking for deductions won't help as much under Obama's plan.
Looking for deductions won't help as much under Obama's plan.   (Shutterstock)
Those earning enough must calculate both their regular taxes and the alternative minimum tax.
Those earning enough must calculate both their regular taxes and the alternative minimum tax.   (Shutterstock)
President Barack Obama speaks about his fiscal 2010 federal budget, in this Thursday Feb. 26, 2009 file photo taken in the Eisenhower Executive Office Building on the White House campus in Washington.
President Barack Obama speaks about his fiscal 2010 federal budget, in this Thursday Feb. 26, 2009 file photo taken in the Eisenhower Executive Office Building on the White House campus in Washington.   (AP Photo/Charles Dharapak)
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4 comments
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Thinker
Feb 28, 09 12:46 PM CST
I make under $30,000 a year and pay 28% in taxes. I notice the loss a lot. My boyfriend makes $50,000 a year and pays 35% in taxes. He feels the loss, too. The very wealthy (over $500,000 a year) have been paying 15% in taxes. They hardly notice it, but think they should pay $0 our of principle. I am glad it's becoming for fair for the middle class. Reply
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RobN
Feb 28, 09 1:30 PM CST
This comment makes no sense. Want to try again?
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Snowleopard
Feb 28, 09 5:59 PM CST
What "Thinker" is referring to is that the rich often pay taxes on a completely different tax system. Since they are often "investors" rather than employees, they pay taxes using the capital gains tax on a rate of 15%. This dual tax system is unfair, and leads to severe income inequality. I have no issue with those who work harder and therefore making more money. What I do have an issue with is this system that seems to amplify the wealth of those who are already wealth, while those working for a living slip deeper into debt.
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paul123
Mar 1, 09 7:57 AM CST
fairtax anyone? Reply
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