Question about Obama's Tax Plan

[zevo]

With a tax increase on families with a combined income of 250,000 or greater, how does that work? Is it just specifically on taxed income? Lets say,hypothetically, my wife and I make 250,000 combined, but we contribute 16,500 each into our 401k anually. Does this mean our taxed income is really only 217,000 and therefore we would not be effected by this tax plan? Just curious. also I am by no means a whizz in politics, hence I never post on this board. I apologize if this question is stupid, but I always wondered about this. Thanks

[zevo]

I guess the question really was stupid.

[Simon]

I guess the question really was stupid.

The question is fine.

If you want any responses in here you're probably better off spouting some gibberish about how the left/right is stupid and how anything but the purest conservative/liberal lockstep ideology is a personal affront to humanity and a harbinger of the world's end.

I don't know the answer to your question although somebody here might be able to help you the next time they pop in (Chef J?). If i had to guess I'd say the campaign rhetoric you're referring to re: the $250,000 income is something that's going to fluctuate wildly as this administration explores the limits of its influence in upcoming months.

[DC Tom]

I guess the question really was stupid.

 

I'd answer...but I really don't know. It's a Sunday. See if someone gives you a serious answer tomorrow.

 

But if it doesn't happen on the first page, it's not going to happen.

[Jim in Anchorage]

Just a guess-I would think anything OVER $250,000 is taxed at the higher rate. For example,lets say they make the top rate 50% and you make $350,000. $250,000 would be taxed at the lower rate[say33%] only the $100,000 over would be subject to the higher tax. You would not have to pay 50% on the entire amount.

[Alaska Darin]

It's the amount OVER $250K of your Adjusted Gross Income (AGI).

 

Adjusted Gross Income is defined as gross income minus adjustments to income. If your income (e.g., change in job) or personal circumstances (e.g., change in marital status) did not change from last year, refer to your 2008 federal income tax return to get a quick estimate of your 2009 AGI. On your 2008 federal tax return, please refer to:

 

* Line 4 if you filed a Form 1040EZ

* Line 21 if you filed a Form 1040A

* Line 37 if you filed a Form 1040

[finknottle]

The short answer is yes - I think your understanding is correct.

[GG]

Last conversations were to levy higher taxes on $235,000 of Taxable Income.

 

Where did the $250K go, you may ask? Well, wasn't it apparent to everyone that on the campaign trail, Obama was referring to $250K in Adjusted Gross Income, and if you apply an average itemized deduction of $15k (not fact-verified) you get to $235K.

 

Yes, I know Obama never specifically spelled out AGI vs TI in his campaign, so of course he shouldn't be held accountable for people misunderstanding him. (Again)

[Nanker]

Wage earners are responsible to pay Federal taxes based on brackets of income that are published by the IRS whenever the withholding rates change - which they just have. Here's the latest one.

It's only the income and interest earned above the "Over x - But not over y" (previous level) that is taxed at the (Plus z% of excess over x (next higher level).

 

Everybody got a nice tax break from Obama recently - whether you will have to pay it back at the end of the year is the question. If you and your lovely partner earned over $95,175 there's no question. You're going to owe the government more.

 

Of course, let's not lose sight of the current plan to tax the employer-paid health care benefits. Healthcare insurance averages around $16,000 a year for working families and about 58% of that is funded by employers (on average). The proponents of this tax want the employee to pay Federal taxes on that $9,300 which is anywhere from 10% to 35% - depending on which tax bracket you fall into. The extra "income" from this health care benefit could actually push one into a higher tax bracket.

 

So, get ready to pony up another $900 to $3,200 to Uncle Obama to pay for your debt to society.

I'll bet the teachers and other government employees that have 100% healthcare coverage are going to be pissed when they have to start paying.

[Kelly the Dog]

Last conversations were to levy higher taxes on $235,000 of Taxable Income.

 

Where did the $250K go, you may ask? Well, wasn't it apparent to everyone that on the campaign trail, Obama was referring to $250K in Adjusted Gross Income, and if you apply an average itemized deduction of $15k (not fact-verified) you get to $235K.

 

Yes, I know Obama never specifically spelled out AGI vs TI in his campaign, so of course he shouldn't be held accountable for people misunderstanding him. (Again)

I don't understand this. The US Tax Policy evaluation of the plans specifically says it's "Adjusted Gross Income OVER $250K". I could be wrong but that to me says after the adjustment if it's over 250, not taking anything over 250 before the adjustment.

 

I understand the standard deduction and itemized come after that. But I don't know what the confusion is. It seems like it's a specific line on your tax form that everyone goes by.

[VABills]

Wage earners are responsible to pay Federal taxes based on brackets of income that are published by the IRS whenever the withholding rates change - which they just have. Here's the latest one.

It's only the income and interest earned above the "Over x - But not over y" (previous level) that is taxed at the (Plus z% of excess over x (next higher level).

 

Everybody got a nice tax break from Obama recently - whether you will have to pay it back at the end of the year is the question. If you and your lovely partner earned over $95,175 there's no question. You're going to owe the government more.

 

Of course, let's not lose sight of the current plan to tax the employer-paid health care benefits. Healthcare insurance averages around $16,000 a year for working families and about 58% of that is funded by employers (on average). The proponents of this tax want the employee to pay Federal taxes on that $9,300 which is anywhere from 10% to 35% - depending on which tax bracket you fall into. The extra "income" from this health care benefit could actually push one into a higher tax bracket.

 

So, get ready to pony up another $900 to $3,200 to Uncle Obama to pay for your debt to society.

I'll bet the teachers and other government employees that have 100% healthcare coverage are going to be pissed when they have to start paying.

I'll bet those will be exempt along with all union employees. Only non-union health benies would be fair to tax.

[Nanker]

I'll bet those will be exempt along with all union employees. Only non-union health benies would be fair to tax.

Great idea! I wonder if they'll let union employees keep their federal deductions for home interest and local taxes when the rest of us lose them.

[zevo]

I just dont get it. I consider myself a republican and a pretty conservative one but I dont care who is in office as long as it benefits the United States. I really think Obama is really reaching on this plan. I'm sorry but in the year 2009 a combined income of 250,000 is just not that much anymore. Obama is the 2009 version of robinhood. Except in this case his idea of "rich" is grossly miscalculated. And the other thing that gets me are the people who blindly voted for him thinking they will be getting a piece of the so-called "rich". This is just not the foundation this country was built upon. The American Dream is to be able to go from rags to riches with hardwork and perseverance and in some cases a little luck.

 

Ok now I'm done.

[Kelly the Dog]

I just dont get it. I consider myself a republican and a pretty conservative one but I dont care who is in office as long as it benefits the United States. I really think Obama is really reaching on this plan. I'm sorry but in the year 2009 a combined income of 250,000 is just not that much anymore. Obama is the 2009 version of robinhood. Except in this case his idea of "rich" is grossly miscalculated. And the other thing that gets me are the people who blindly voted for him thinking they will be getting a piece of the so-called "rich". This is just not the foundation this country was built upon. The American Dream is to be able to go from rags to riches with hardwork and perseverance and in some cases a little luck.

 

Ok now I'm done.

The first 250K stays at the same rate as in the Bush years. Anything over 250K goes up 2-4% to exactly what it was during the Clinton years. It's not as though it's an extraordinary or unprecedented rate increase.

[GG]

I don't understand this. The US Tax Policy evaluation of the plans specifically says it's "Adjusted Gross Income OVER $250K". I could be wrong but that to me says after the adjustment if it's over 250, not taking anything over 250 before the adjustment.

 

Add one more notch to the silver tongue one. On the campaign, he never specifically spelled out that the higher tax would be on $250K of AGI.

 

Linky

 

In fact, if you go to Obama/Biden's official campaign tax platforms, the language is consistent - "Families making more than $250,000 in income."

 

We'll just have to chalk this up to another instance of the public misinterpreting Obama's clear message in the campaign.

[Kelly the Dog]

Add one more notch to the silver tongue one. On the campaign, he never specifically spelled out that the higher tax would be on $250K of AGI.

 

Linky

 

In fact, if you go to Obama/Biden's official campaign tax platforms, the language is consistent - "Families making more than $250,000 in income."

 

We'll just have to chalk this up to another instance of the public misinterpreting Obama's clear message in the campaign.

I see your point now and agree with you. You seemed to imply the number moved as if the plan recently changed. The plan was always the same though, and whenever you looked at the plans online, they would say Adjusted Income. Like this link before the election about the actual plans. And, of course, they are still technically right. If you "make" over 250K...

http://www.taxpolicycenter.org/publication...l.cfm?ID=411749

 

But ultimately, you're right though. Both of them often left out the AGI part and thereby could have been implied it was the bottom line take home 250K, and that wasn't true. They did say "making" though. They shouldn't have couched it that way, even though it was true, and should have been more clear.

 

That said, whenever anyone asks you what you "make", you always say the X before tax number. Unless you say I "take home" Y.

[zevo]

The first 250K stays at the same rate as in the Bush years. Anything over 250K goes up 2-4% to exactly what it was during the Clinton years. It's not as though it's an extraordinary or unprecedented rate increase.

 

Isnt 250,000 today not even close to what it was during clintons days. Todays number should be adjusted to todays financial climate.

[Kelly the Dog]

Isnt 250,000 today not even close to what it was during clintons days. Todays number should be adjusted to todays financial climate.

I don't know that the 250K cut off figure was around during the Clinton years, I don't think it was. Someone else would probably know what the cut off was. I was talking only about the top percentage rates being raised to 39.6% I believe instead of 36% now. The rates were the ones returned to the Clinton years, not the income level.

[GG]

I don't know that the 250K cut off figure was around during the Clinton years, I don't think it was. Someone else would probably know what the cut off was. I was talking only about the top percentage rates being raised to 39.6% I believe instead of 36% now. The rates were the ones returned to the Clinton years, not the income level.

 

 

Here you go.

 

You're also ignoring another major facet of the Golden One's tax plan - eliminating deductions for those in that $235K millionaires' tax bracket. That moves the effective rate higher. In some sense, it's bittersweet irony, as people most likely to be nailed by the full brunt of the tax increase are the ones in states who overwhelmingly voted for Obama. Let's see how they feel next April 15.

[zevo]

Here you go.

 

You're also ignoring another major facet of the Golden One's tax plan - eliminating deductions for those in that $235K millionaires' tax bracket. That moves the effective rate higher. In some sense, it's bittersweet irony, as people most likely to be nailed by the full brunt of the tax increase are the ones in states who overwhelmingly voted for Obama. Let's see how they feel next April 15.

 

I agree completely. I dont like to get to fired up about politics, but the one thing that was so apparent was the fact that people were voting blindly and bit on all the hype. Its a real shame.