http://www.nytimes.com/2011/09/18/us/politics/obama-tax-plan-would-ask-more-of-millionaires.htmlThe marginal tax rate is the percentage paid on the last dollar a person earns. The current system has six marginal tax rate percentages — 10, 15, 25, 28, 33 and 35 — and each applies to a progressively higher amount of income. In theory, a wealthy filer pays the lower rates on income within each bracket, but the bulk of their income is taxed at the top 35 percent rate. Middle-class taxpayers generally pay marginal rates of 15 percent or 25 percent.
But investors like Mr. Buffett pay no more than 15 percent on most of their income because that rate applies to capital gains, dividends and “carried interest,” which is the compensation paid to hedge fund partners and investment managers like Mr. Buffett.
Another reason many wealthy Americans pay a smaller share of their income in federal taxes is that the Social Security payroll tax does not apply to income above $106,800; most people do not reach the cutoff and pay the tax on all their income.
Counting income and payroll taxes, Mr. Buffett has said he paid an effective tax rate of 17.4 percent for 2010 compared with an average 36 percent rate for many employees of his company, Berkshire Hathaway.
Under Mr. Obama’s proposal, Mr. Buffett and others with taxable income of more than $1 million would pay a minimum tax rate closer to his employees’ rates. But Mr. Obama will leave the details of how such a rate would be calculated — whether to focus on the overall federal tax burden of middle-income individuals generally, or their marginal rates — to the debate over rewriting the tax code.
President Obama has more than half a good idea here , but it is being presented very clumsily, practically backwards.
Trying to exploit the poor Americans jealousy of the wealthy is the result of a basic misunderstanding of the American people, most of us are not afflicted with such hurtfull jealousy. Winning the support of those who do brings too little support and alienates nearly as many.
But there is an odvious discrepancy in tax application which causes allmost al of us to agree that there is too much complexity in the tax law , too many loopholes and too little real concern for equity.
There are litterally thousands of loopholes , I remember President Reagan(no less) leading a very popular attack on these things , President Obama could do much the same to benifit with the public and improve the financhial condition of the government.
What he is presently proposing would be too small in effect to even be noticed by most of us and would have no noticable effect on national debt either, only a very few of us earn more than a million taxable dollars a year, that is a minority even of millionaires.
