Tax cuts are for the rich?

[LiterateStylish]

I keep reading that Bush's tax cuts are just for the rich. How is a family of 4, earning $50,000-$60,000 rich? Does Bush's tax cuts help the rich more than the not as rich. Yes. But that doesn't mean that it doesn't help others. I don't consider $50,000-$60,000 rich. I consider that very low, and yet that range saves between $1,100 and $2,000 a year through the Bush tax cuts, and the people making less than $50,000 aren't being taxed much anyway.

Sorry for the rant. If you find error in what I have written, please reply with the objections. I have been wrong before.

[35Pete]

I keep reading that Bush's tax cuts are just for the rich. How is a family of 4, earning $50,000-$60,000 rich? Does Bush's tax cuts help the rich more than the not as rich. Yes. But that doesn't mean that it doesn't help others. I don't consider $50,000-$60,000 rich. I consider that very low, and yet that range saves between $1,100 and $2,000 a year through the Bush tax cuts, and the people making less than $50,000 aren't being taxed much anyway.

Sorry for the rant. If you find error in what I have written, please reply with the objections. I have been wrong before.

I don't consider 300,000 a year to be "rich".

The people that own the 300,000 a year crowd are the true wealthy.

Since they're ruthless, then, as mik once said to paraphrase him, "let them concentrate it (all the wealth) under Bush, it'll be easier to take it from them".


One thing is certain. The middle class shrank under Bush and it wasn't upper mobility.

[notacon]

The reason you are confused is because you are using faulty analysis based on misconceptions and misinformation.

Let's go through your comments item by item.

I keep reading that Bush's tax cuts are just for the rich.

No one has said that the Bush tax cuts a "just" for the rich. People that know the facts say that bush's tax cuts mainly benefit the rich. There is a big difference.

There have been many Bush tax cuts also. Depending on which ones you are talking about there is a varying degree that benefit the rich...some fabulously so, and some not as much. As I go though the rest of your comments I will explain.


How is a family of 4, earning $50,000-$60,000 rich?


They aren't. But, you are singling out a very small slice of the population with the "$50,000 to $60,000 family of four" demographic. First, more than 60% of the households in the US earn LESS than $50,000 per year. Your parsed demographic is approximately 5% to 7% of the families in this country. It is a carefully crafted cherry picked demo to obscure the facts about Bush's tax cuts.

60% of families earn less than $44,000 per year. That group received 19.9% of the total of Bush's original 2001 income tax cuts.

The top 1%, those earning more than $373,000 per year, with an average income of $1,117,000 received 35% of the total of Bush's tax cuts.

The carefully cherry picked demo that you describe is similar to the "fourth 20%" (above the bottom 60% and below the top 20%) of families...those earning between $44,000 and $72,000. That group only received 14.7% of Bush's cuts.


Does Bush's tax cuts help the rich more than the not as rich. Yes. But that doesn't mean that it doesn't help others.


Again, this is a straw man. It is not the fact that the cuts don't "help" others that are not "rich", what is so objectionable is that they are so designed to greatly benefit those with extremely high incomes while throwing a few crumbs to the less fortunate.

The essence of "trickle down" economics.

I don't consider $50,000-$60,000 rich. I consider that very low...


Again...you may consider this income level "low" but when OVER 60% of the families earn less than this amount it is not an insignificant level.


...and yet that range saves between $1,100 and $2,000 a year through the Bush tax cuts...


Here you are being caught up in the very essence of the dishonest way that Bush tried to sell his cuts as "benefiting the middle class". We have already established that this income range is a very small slice of American families, and more income than the vast majority of families. More insidious it the need to further "slice and dice" this group by cherry picking those in this income range as a "family of four".

Why?

Because in this mythical family and their tax cut being in the "$1,100 to $2,000"...$1,000 of that is the increase in the child credit. That ONLY being realized if you have two dependent children. No kids...no credit.

Single?...screw you. Older and the kids are grown up and out of the house...eat shit.

I do not have the exact number, but I estimate the example you gave (as supplied by the Bush administration to propagandize their plan) may be just 1% or 2% of the population.


... and the people making less than $50,000 aren't being taxed much anyway.


Really?!?!?!? This is more cherry picking and actually designed to be very misleading. What you mean to say, is that those families earning $50,000 a year do not pay much federal income taxes. This statement ignores the $3575 paid in payroll taxes, it ignores the (at minimum) $1000 paid in sales taxes. It ignores any real estate and school taxes.

The largest percentage of total taxes paid by the very wealthy (top 1%) is federal income taxes...the target of Bush's tax cuts in 2001. The smallest percentage of taxes paid by the same is payroll taxes (Social Security taxes max out at $97,000 per year).

The largest percentage of taxes paid by the bottom 60% is payroll taxes. The smallest percentage of taxes paid by this group is federal income taxes.

The net result is that Bush targeted reductions in the taxes paid the most be the very richest in this country...and skewed to that group too.


Sorry for the rant. If you find error in what I have written, please reply with the objections. I have been wrong before.

No need to apologize. I just wish that more people would investigate what is meant when a GOP politician says "I will cut your taxes".

Usually they don't.

I happen to be in the top 5% of income earners and I realized very little benefit out of bush's cuts. The biggest percentage of my total cut is, like most people, in the child credit....I receive $1000 a year.

If more would look carefully at just what GOP tax cuts are almost always aimed to do, they would reject them outright and demand that they be redesigned to benefit a broader range of the population.

I have to get on a plane in 3 hours and would love to go on and on like I do.

Here is one of the sources that I use to educate myself. It is a liberal leaning group, but one of the only organizations around that has the computer information down to analyze ta distribution tables. No one yet has been able to dispute their data.

Distributional Effects of the Senate Finance Committee-Passed Version of the Bush Tax Plan (http://www.ctj.org/html/senmark.htm)

[35Pete]

Notacon. The people making over 60K a year should not be penalized because so many make under 60K. That's just not right. And you cannot claim in any way that it is "fair". Please don't give me the "they're greedy so we're gonna take it from them either". In principle I agree that those that use their position of wealth to exploit and use people of lesser means should be reigned in. Wealth is NOT relative regardless of what it feels like to make 18K a year and see someone making over 100K a year (which has been my personal experience in life looking in both directions). I am considered by you to be a "top earner" (boy I wish it felt like that LOL) but I do NOTHING to exploit others. You're re-classifying the middle as rich. That's what ****ing alienates people from the democrats. What you should be focusing on are people of elitist class that can wave their hand and make 1,000 people unemployed. It's always packaged as "being efficient, answering to the stockholders, stopping the bleeding, ect...) But you and I know that those decisions are put forth by an elite few and the "overall good of the company" has shit to do with it. They're squeezing a few more million out for themselves at the expense of others. If you saw it that way, and stopped bitching about someone make 175K or so a year, then I'd probably see more eye to eye with you. The top slots LOVE when you bitch about 80K, 150K, 250K a year and you demand that they get soaked. That distracts from the real issue of their using trusts, foundations, tax shelters, clever accounting, and incorporation to fatten themselves while the middle gets pooched arguing among themselves who in the middle is going to get soaked more.

You are doing a great disservice in my opinion. Not to be argumentative or pick a fight. Not my intent. But you're distracting from the real issue.

[LiterateStylish]

I don't consider 300,000 a year to be "rich".

The people that own the 300,000 a year crowd are the true wealthy.

Since they're ruthless, then, as mik once said to paraphrase him, "let them concentrate it (all the wealth) under Bush, it'll be easier to take it from them".

One thing is certain. The middle class shrank under Bush and it wasn't upper mobility.

Could you re-word this in a way that cuts straight to your opinion and the point you are trying to communicate. Please?

For some reason I am having difficult time deciphering what you are actually trying to say.

[chickie]

Tax cuts are not just for the rich, and the rich should have more of the cuts considering they are the ones paying for all the social programs.

The poor don't pay taxes, the single mothers who are middle class, they get all their tax money back and then some of yours.

Everybody keeps complaing that the rich just keep on getting richer and they need to pay more taxes. blah blah blah..

Just because someone makes 150k a year, 500k a year doesn't mean everyone should.

[35Pete]

Could you re-word this in a way that cuts straight to your opinion and the point you are trying to communicate. Please?

For some reason I am having difficult time deciphering what you are actually trying to say.

Sorry. You have not been around long enough to know all of my stance.

Notacon is right about reigning in the super-rich. Those that use their influence to take more. That's not a level playing field. I think that the uber-wealthy, the Palm Beach, Santa Monica, Montauk, Greenwich, Westchester crowd, the Wall Street owners and their cronies, ought to be soaked.

Give back what you've stolen.

But I don't consider the hard-earned "millionaire next door" who's earned his take through fair play, hard work, and innovation to be part of that crowd.

Make sense?

[LiterateStylish]

Sorry. You have not been around long enough to know all of my stance.

Notacon is right about reigning in the super-rich. Those that use their influence to take more. That's not a level playing field. I think that the uber-wealthy, the Palm Beach, Santa Monica, Montauk, Greenwich, Westchester crowd, the Wall Street owners and their cronies, ought to be soaked.

Give back what you've stolen.

But I don't consider the hard-earned "millionaire next door" who's earned his take through fair play, hard work, and innovation to be part of that crowd.

Make sense?

Gotchya.

[notacon]

I am surprised at your reaction Pete. You really seem to be misunderstanding what I wrote. I think we have more in common on this subject than you think.

Let's go through your post and see if we can clear up the miscommunication.



Notacon. The people making over 60K a year should not be penalized because so many make under 60K. That's just not right.


Not sure what you are thinking here. I didn't say that people making over $60,000 should be "penalized". I didn't say that, and I did not mean to even allude to saying that.

I did state some facts. That being that well over 70% of the families in this country make less than $60,000.


And you cannot claim in any way that it is "fair". Please don't give me the "they're greedy so we're gonna take it from them either".


Again, Pete...I am not sure where in the world you are getting that idea. I never used the word "fair". And I ABSOLUTELY NEVER used the word "greedy". In fact I would bet you that I have NEVER used that word in ANY of my posts EVER!

I don't think that rich people are "greedy". In fact, I have already stated that I am in the top 5% of wage earners...and I am doing everything I can to climb even higher.

What I think is wrong, is the false impression that Bush, and the GOP in general, gives when they propagandize that they are presenting tax cuts for the "middle class".

They aren't.

Maybe this is a good time to get some terms out of the way. I would split up the population, in terms of wealth this way (keep in mind that I am using dollar figures from 2001)...

Bottom 20% - less than $15,000, average $9,300 = very poor.

Next 20% - $15,000 to $27,000, average $20,600 = poor

Next 20% - $27,000 to $44,000, average $34,400 = lower middle class

next 20% - $44,000 to $72,000, average $56,400 = middle class

This represents 80% of the families in the US.

next 15% - $72,000 to $147,000, average $97,400 = upper middle class

next 4% - $147,000 to $373,000, average $210,000 = highest middle class

top 1% - $373,000 or more, average $1,117,000 = very wealthy...the "rich"

The top 1% got 35% of Bush's tax cut. The bottom 99% got 65%.

THAT is Bush's tax cut mostly benefiting the rich.


In principle I agree that those that use their position of wealth to exploit and use people of lesser means should be reigned in. Wealth is NOT relative regardless of what it feels like to make 18K a year and see someone making over 100K a year (which has been my personal experience in life looking in both directions).


I agree. And the Bush administration, and the GOP that supports his fiscal policy has done just that.

A broad based tax cut that favors the bottom 99% of families would be better than what Bush did...and more honest too.


I am considered by you to be a "top earner" (boy I wish it felt like that LOL) but I do NOTHING to exploit others. You're re-classifying the middle as rich.


HUH?!?!?! What are you talking about?!?!?!

Are you earning over almost $400,000?!?!?

In all actuality it is the GOP that constantly mixes up the "middle class" with the very rich. Their dishonest selling of Bush top heavy tax cuts are proof.

Read what I wrote again Pete. The "re-classifying the middle as rich" is in your mind...I did not write that, nor do I believe that.


That's what ****ing alienates people from the democrats.


Actually it is the dishonest way the GOP misrepresents their regressive tax policies and lies about the Democrats is what alienates people.

Stylish presented a totally false premise based on misrepresentation coming from the right wing. I don't blame him...he is just repeating what he hears.

I know the facts and I present them.

I am sick and tired of the GOP falsely selling their tax schemes as "cutting your taxes" What bullshit.

They dishonestly call the estate tax the "death tax" when it is nothing of the sort. only about 2% of estates pay that tax but yet they try to demagogue it by suggesting that it is paid on "death"...it isn't. Only the biggest estates are nicked by that tax. There have been many reasonable suggestions to raise the level at which it kicks in, but the GOP will have none of that.

They just want to beat the Dems over the head and make it sound like everyone has to pay it...when in reality they are just protecting the elite of the elite.


What you should be focusing on are people of elitist class that can wave their hand and make 1,000 people unemployed. It's always packaged as "being efficient, answering to the stockholders, stopping the bleeding, ect...) But you and I know that those decisions are put forth by an elite few and the "overall good of the company" has shit to do with it. They're squeezing a few more million out for themselves at the expense of others.


Another subject, that I really agree with you on.

If you saw it that way, and stopped bitching about someone make 175K or so a year, then I'd probably see more eye to eye with you.

I have already shown you that you are wrong in your perception. I am talking about those earning over $400,000.

the top slots LOVE when you bitch about 80K, 150K, 250K a year and you demand that they get soaked.


Wrong again. For the umpteenth time, I am talking about the people that average well over $1,000,000 a year.

And I HAVE NEVER advocated that they get "soaked" Just that they should not get the bulk of tax cuts WHEN WE ARE RUNNING HUGE DEFICITS What, in fact, is going on, is that we are pouring money back to people that are earning millions of dollars WITH BORROWED MONEY.

It is morally reprehensible that my kids, and grandkids will have to pay for this type of robbing from the non-rich (including those making close to $200,000) to suck up to the very wealthy...those averaging over $1,000,000.

ON TOP of the unconscionableness of that, Bush and the GOP has sold it as a cut "benefiting the middle class"


That distracts from the real issue of their using trusts, foundations, tax shelters, clever accounting, and incorporation to fatten themselves while the middle gets pooched arguing among themselves who in the middle is going to get soaked more.


You are distracting from it by misrepresenting what I am advocating. I agree with you here. Indeed, it is worse than you think.

The top earners...the real multi-millionaires and billionaires have very low effective tax rates. Most do not get paid with a salary, and they don;t get a W-2 like us...they are independent business people with so many ways to hide and shelter income that the amount they report is grossly minimized.


You are doing a great disservice in my opinion. Not to be argumentative or pick a fight. Not my intent. But you're distracting from the real issue.

I hope I have cleared up the miscommunication.

Maybe I was not clear enough. I hope the above explanation makes sense to you.

[notacon]

This is the typical demagoguing that the GOP followers swallow hook, line and sinker.

Tax cuts are not just for the rich, and the rich should have more of the cuts considering they are the ones paying for all the social programs.


Really?!?!?!

Exactly what "social programs" are you talking about.

I do not want to assume what you mean. I want specifics because if you are trying to say what almost every right winger tries to dish out...you are wrong!, wrong!, wrong!

You better have some facts to back your assertion up too.


The poor don't pay taxes, the single mothers who are middle class, they get all their tax money back and then some of yours.


Really?!?!?!?!

What total nonsense! Read what I wrote above.

What do you mean "get all their tax money back"...exactly, what do you mean.

Are you talking about withholding?...sales tax?...payroll tax?...property tax?

Really, I want to know what you are talking about before I rip your false assertions to shreds.


Everybody keeps complaing that the rich just keep on getting richer and they need to pay more taxes. blah blah blah..

Just because someone makes 150k a year, 500k a year doesn't mean everyone should.

HUH? What are you talking about here?

The people that earn big bucks earn it for a reason...they are smarter and they work harder and for longer hours. It's no secret.

I earn in between the two numbers you just stated.

You want to know why?

Because I EARN IT!!!!

And I pay MORE than my fair share of taxes.

Last year, in federal income tax, state income tax, social security tax, medicare tax and property taxes I paid well over $30,000.

I did not get any huge "tax cut" because of Bush. I am not a millionaire.

You better come to this table with more than GOP talking points.

[anEinherjer]

A broad based tax cut that favors the bottom 99% of families would be better than what Bush did...and more honest too.

Hey notacon, I'm happy to see that you're fighting the good fight with facts and reason and not just yelling like you did to me years ago. :D

But I gotta say... the child tax credit is about as broad-based as Congress will ever pass.....

And I HAVE NEVER advocated that they get "soaked" Just that they should not get the bulk of tax cuts WHEN WE ARE RUNNING HUGE DEFICITS What, in fact, is going on, is that we are pouring money back to people that are earning millions of dollars WITH BORROWED MONEY.

It is morally reprehensible that my kids, and grandkids will have to pay for this type of robbing from the non-rich (including those making close to $200,000) to suck up to the very wealthy...those averaging over $1,000,000.

I find it way the heck worse that they SPEND so much to create such huge deficits. Sure we can complain and say "don't cut taxes so much" but WTF....



Last year, in federal income tax, state income tax, social security tax, medicare tax and property taxes I paid well over $30,000.

Oh man, so did we (no kids yet, so no tax credit for me!!). That's why I vote Libertarian. :) I'm not getting my money's worth out of those dishonest leeches.

[FamousAmos]

Wow, I need to read up on these tax issues because I had no idea you could be taxed 30 grand like anEinherjer!

My God that's a lot of money!

[notacon]

Hey notacon, I'm happy to see that you're fighting the good fight with facts and reason and not just yelling like you did to me years ago. :D

But I gotta say... the child tax credit is about as broad-based as Congress will ever pass.....


Hey...you deserved your as kicking years ago! :D

And, facts are always behind my yelling and screaming.

I am not knocking the child credit. I have two dependent kids and I will take the $1000 extra. Remember too, that the Bush 2001 tax plan only increased the child credit $100 for the first two years, to $600 in 2001 and 2002, and is $1000 only until 2011.

In all reality, the most broad based cut is to rates, which Bush's 2001 plan did across the board.

What is usually unmentioned is that the richest taxpayers enjoy tax cuts in every bracket below their taxable income.

As the numbers get bigger the percentage applied results is huge dollar amounts.

What is misleading is touting out a cherry picked "family", that earning $50,000 to $60,000 family of four...saying that they enjoyed a $1,200 tax cut and using this information to say that Bush's tax cuts were not "only for the rich".

My point is that there are not ENOUGH tax cuts for the bottom 99% of families and TOO MUCH for the top 1%.

The figures above (top 1% getting 35% of the cuts) were ONLY for the 2001 tax plan. Since then, the additional cuts were skewed even more to the very wealthy.

All of the Bush tax cuts taken together, 51% go to the top 1% of families, those averaging over a million dollars in income

We are getting the shaft, and the GOP loyalists are spitting out misrepresentations in support of getting shafted.


I find it way the heck worse that they SPEND so much to create such huge deficits. Sure we can complain and say "don't cut taxes so much" but WTF....


You mean like spending over a TRILLION dollars on a war of choice, based on lies, that this country does not need?

Or wasteful spending on weapons that are not needed to defend the country from small bands of terrorists but instead are designed to line the pockets of the same millionaires that Bush's tax cuts benefit?

Yeah...I'm there.


Oh man, so did we (no kids yet, so no tax credit for me!!). That's why I vote Libertarian. :) I'm not getting my money's worth out of those dishonest leeches.

Don't have kids just to get a tax cut anEin! They ALWAYS cost you way more. :)

[chickie]

Notacon - I am out here reading your posts and doing some research. From what I have always read, watched, listened to and so forth - the middle class America families are the ones getting the break's - I could be wrong - yes I can admit it. I am reading and researching.

Your posts on this topic however are very convincing.

I am confused though because if you are investing your money into tax free investments, 401(k), IRA. Also, you can't have a extremly high rate of credit card debt. You cab deduct the intrests on home equity loans, but not the interest on credit cards.

So if you are smart with your money, plan for the longterm not short term, you too can recieve more tax breaks.

I am still researching though - so don't come back yelling at me - so far I have enjoyed reading your and have been very informational.

[35Pete]

I am surprised at your reaction Pete. You really seem to be misunderstanding what I wrote. I think we have more in common on this subject than you think.

Let's go through your post and see if we can clear up the miscommunication.





Not sure what you are thinking here. I didn't say that people making over $60,000 should be "penalized". I didn't say that, and I did not mean to even allude to saying that.

I did state some facts. That being that well over 70% of the families in this country make less than $60,000.



Again, Pete...I am not sure where in the world you are getting that idea. I never used the word "fair". And I ABSOLUTELY NEVER used the word "greedy". In fact I would bet you that I have NEVER used that word in ANY of my posts EVER!

I don't think that rich people are "greedy". In fact, I have already stated that I am in the top 5% of wage earners...and I am doing everything I can to climb even higher.

What I think is wrong, is the false impression that Bush, and the GOP in general, gives when they propagandize that they are presenting tax cuts for the "middle class".

They aren't.

Maybe this is a good time to get some terms out of the way. I would split up the population, in terms of wealth this way (keep in mind that I am using dollar figures from 2001)...

Bottom 20% - less than $15,000, average $9,300 = very poor.

Next 20% - $15,000 to $27,000, average $20,600 = poor

Next 20% - $27,000 to $44,000, average $34,400 = lower middle class

next 20% - $44,000 to $72,000, average $56,400 = middle class

This represents 80% of the families in the US.

next 15% - $72,000 to $147,000, average $97,400 = upper middle class

next 4% - $147,000 to $373,000, average $210,000 = highest middle class

top 1% - $373,000 or more, average $1,117,000 = very wealthy...the "rich"

The top 1% got 35% of Bush's tax cut. The bottom 99% got 65%.

THAT is Bush's tax cut mostly benefiting the rich.



I agree. And the Bush administration, and the GOP that supports his fiscal policy has done just that.

A broad based tax cut that favors the bottom 99% of families would be better than what Bush did...and more honest too.



HUH?!?!?! What are you talking about?!?!?!

Are you earning over almost $400,000?!?!?

In all actuality it is the GOP that constantly mixes up the "middle class" with the very rich. Their dishonest selling of Bush top heavy tax cuts are proof.

Read what I wrote again Pete. The "re-classifying the middle as rich" is in your mind...I did not write that, nor do I believe that.



Actually it is the dishonest way the GOP misrepresents their regressive tax policies and lies about the Democrats is what alienates people.

Stylish presented a totally false premise based on misrepresentation coming from the right wing. I don't blame him...he is just repeating what he hears.

I know the facts and I present them.

I am sick and tired of the GOP falsely selling their tax schemes as "cutting your taxes" What bullshit.

They dishonestly call the estate tax the "death tax" when it is nothing of the sort. only about 2% of estates pay that tax but yet they try to demagogue it by suggesting that it is paid on "death"...it isn't. Only the biggest estates are nicked by that tax. There have been many reasonable suggestions to raise the level at which it kicks in, but the GOP will have none of that.

They just want to beat the Dems over the head and make it sound like everyone has to pay it...when in reality they are just protecting the elite of the elite.



Another subject, that I really agree with you on.



I have already shown you that you are wrong in your perception. I am talking about those earning over $400,000.



Wrong again. For the umpteenth time, I am talking about the people that average well over $1,000,000 a year.

And I HAVE NEVER advocated that they get "soaked" Just that they should not get the bulk of tax cuts WHEN WE ARE RUNNING HUGE DEFICITS What, in fact, is going on, is that we are pouring money back to people that are earning millions of dollars WITH BORROWED MONEY.

It is morally reprehensible that my kids, and grandkids will have to pay for this type of robbing from the non-rich (including those making close to $200,000) to suck up to the very wealthy...those averaging over $1,000,000.

ON TOP of the unconscionableness of that, Bush and the GOP has sold it as a cut "benefiting the middle class"



You are distracting from it by misrepresenting what I am advocating. I agree with you here. Indeed, it is worse than you think.

The top earners...the real multi-millionaires and billionaires have very low effective tax rates. Most do not get paid with a salary, and they don;t get a W-2 like us...they are independent business people with so many ways to hide and shelter income that the amount they report is grossly minimized.



I hope I have cleared up the miscommunication.

Maybe I was not clear enough. I hope the above explanation makes sense to you.

Yes it did. Thanks.

And I think we can both agree that the idea of a level playing field is the American Dream. And as George Carlin said, It's a dream. Because you've got to be asleep to believe it.

[notacon]

Notacon - I am out here reading your posts and doing some research. From what I have always read, watched, listened to and so forth - the middle class America families are the ones getting the break's - I could be wrong - yes I can admit it. I am reading and researching.

Your posts on this topic however are very convincing.

I am confused though because if you are investing your money into tax free investments, 401(k), IRA. Also, you can't have a extremly high rate of credit card debt. You cab deduct the intrests on home equity loans, but not the interest on credit cards.

So if you are smart with your money, plan for the longterm not short term, you too can recieve more tax breaks.

I am still researching though - so don't come back yelling at me - so far I have enjoyed reading your and have been very informational.

Thanks for having an open mind gopchick.

Interesting that you bring up the interest deduction.

Before Reagan's tax plan in 1982, all interest was deductible. That is one of he reasons that, for all the hoopla surrounding Reagan as the "great tax cutter"...in all reality, he really wasn't.

The pain is always in the details. Reagan changed so very many things...what turned out in the end is that you were in the top 1%, you got HUGE tax cuts. If you were in the bottom 50% (at that time...as I have stated I am now, 25 years later in the top 5% bracket) many actually incurred a TAX INCREASE.

Two other major changes brought on by Reagan's fiscal policy also went to raise my taxes.

One was making unemployment benefits taxable income. Before it was not. I has unemployed for a short time in 1983, amazingly I actually OWED taxes that year. It was quite a shock (and was the start of me closely studying the tax law...and I always do my own taxes and read the publications).

The second change Reagan brought was getting rid of the "marriage penalty". Before Reagan, if a married couple both worked, a "pre-gross-adjusted income" allowed reducing taxable income by 10% of the lower spouses income.

In other words, if husband eared $25,000 and wife earned $20,000, there was a deduction of $2,000 (subject to income guidelines).

All deductions are not the same either. If the above deduction was "post-gross-adjusted income" then it is subject to standard deduction minimums.

In other words, if one is allowed a $2,000 "post-GAI" deduction and the total of their other itemized deductions are $5,000 (total of $7,000), but the standard deduction is $9,000, than the deduction is useless and will not reduce you total tax bill.

The marriage penalty deduction before Reagan, was "pre-AGI" and reduces income before itemized deductions so does not affect that number.

So, using the figures above, the couple would get a reduction of taxable income of $11,000...the $2,000 pre-AGI deduction PLUS the $9,000 standard deduction.

The lesson here, is that when (especially) the GOP says "we will lower your taxes"...you better watch out.

Conversely, when that say that the "Dems with raise your taxes...you better make sure they are really talking about you and not some millionaire.

When the Dems say that they want to "tax only the rich"...you had better make sure they are not categorizing you as "rich" when you are not. (The essence of Pete's and my miscommunication earlier)

I know as much about the tax laws that concern my situation...I suggest everyone does the same.

[notacon]

BTW...401K's are NEVER "tax free".

A standard 401K allows a pre-AGI exclusion of income...in other words the amount you invest is NOT taxable income.

But, you still pay taxes on the amount invested AND any accrued interest, when you actually use the money when you are retired...it is all taxed as "income". In most cases your tax rate is lower because you earn less money when you retire.

The "Roth" IRA works differently. You pay all the usual taxes when you earn the money, but ANY interest earned on the investment is tax free. When you retire and spend that money there are no taxes whatsoever because you paid taxes on it when you earned it...not deferring the taxes on it like a regular IRA.

There are different dollar limits on how much you can invest.

The BEST deal is Roth IRA. The BEST strategy is to invest up to the legal limit in Roth IRA (if financially possible) first, and then put as much as you can afford (and up to the legal limit) into 401K's.

There are also different limits on 401K through an employer and one you take out on your own.

Knowing the tax laws can save you a TON of money when you retire.

[uppy]

next 15% - $72,000 to $147,000, average $97,400 = upper middle class

I'm I don't know about this,it would depend on were you live....I'm hardly upper middle class.In fact I would say I was poor and over taxed

[Crinoline]

If you can afford Starbucks at least once a year, yes you are rich and need to be taxed back to reality. Think of the Children while you sip you $4 cup of coffee, you self absorbed jackass.