*Ostroff, Fair and Company>>>Australia Taxes

Why are govt and media talking about cutting the top tax rate and not the lower/middle rates?

The idea of "cutting taxes" or "tax breaks" for the rich is a myth. The US has increasingly high tax brackets as income increases. Somone who makes $1M pays a higher rate than someone that makes $25K. There are several deductions that are available that are considered to be deductions for the rich, such as mortgage deductions, charitable donations, and others that many low income individuals do not incur. These things lower the marginal tax rate, which is the rate that is paid after deductions.

A poor person who makes $15K gets is in the 10% bracket. They still get a standard deduction of $5k if nothing else, so they pay 10% after that, or $1000 (a marginal rate of 6.7%, 3.3% lower than the bracket rate).

A rich person makes $1M, but has deductions of $300K. He is still in the 38% bracket, and pays that on the remaining $600k ($228K). Against the million, he is actually only paying 22.8%, which is 15.2% lower than his bracket rate.

This is where the "tax breaks for the rich" come in. His deductions knock his rate down 15%, while the poor guy's gets dropped by only 3%. What you have to remember, though, is that the rich guy is still paying 16.1% more of his income in taxes than the poor person. This is why the rich pay something like 95% of the taxes in the country.

The argument that you hear from Dems is playing to the poor who don't understand how the tax system works. This is why a large number of the rich are Republicans - they think it is bad enough that they pay a higher rate than everyone else, but then the Dems say they are getting a break.

Because it's all a monopoly...
it's called the "Trickle Down" theory...it was championed by US President Ronald Reagan. Read about it.....interesting theory, but not plausible.

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