Reply to thread

Message

<blockquote data-quote="UPS Lifer" data-source="post: 1035723" data-attributes="member: 9789">This is a real rough example of tax rate changes versus elimination of deductions.&nbsp; It assumes that there are no restrictions for your deductions (which there is) and every $ in deduction gets to come off your gross income.&nbsp; I am just trying to simplify this to a degree.&nbsp; I will also make the disclaimer that you need to get your tax professional involved for your own situation. Here goes...You make $100,000 - two tax rates - 40% = you owe $40K - 25% rate - you owe $25KWith No deductions - You owe $25K At 40% tax rate you need $37,000 in deductions to get to $25,200 in taxes you oweHow many folks making $100K have $37K in deductions?New example - same ratesYou get a promotion or get to work overtime (because the economy is doing better now that Romney is President!!)Add $50,000 to your income - now you make $150,000At 25% tax rate you owe $37,500 an increase of $12,500 in taxesAt 40% tax rate you will need to have $55,500 in deductions to have taxes of $37,800This just illustrates that dropping the tax rate is more effective at reducing your tax than having deductions. &nbsp; To the wonks out there... this is just an illustration not an actual tax scenario. Nobody has really explained why dropping the rates is more effective especially for the middle and lower class. We have less deductions than the rich and it will put more money in your pocket to spend out in the economy creating jobs.</blockquote>

[QUOTE="UPS Lifer, post: 1035723, member: 9789"] This is a real rough example of tax rate changes versus elimination of deductions. It assumes that there are no restrictions for your deductions (which there is) and every $ in deduction gets to come off your gross income. I am just trying to simplify this to a degree. I will also make the disclaimer that you need to get your tax professional involved for your own situation. Here goes... You make $100,000 - two tax rates - 40% = you owe $40K - 25% rate - you owe $25K With No deductions - You owe $25K At 40% tax rate [B][COLOR=#0000ff]you need $37,000 in deductions to get to $25,200[/COLOR][/B] in taxes you owe [B]How many folks making $100K have $37K in deductions?[/B] [B][SIZE=4] New example - same rates[/SIZE][/B] You get a promotion or get to work overtime (because the economy is doing better now that Romney is President!!) Add $50,000 to your income - now you make $150,000 At 25% tax rate you owe $37,500 an increase of $12,500 in taxes At 40% tax rate [B][COLOR=#0000ff]you will need to have $55,500 in deductions[/COLOR][/B] to have taxes of $37,800 [B]This just illustrates that dropping the tax rate is more effective at reducing your tax than having deductions. [/B] To the wonks out there... this is just an illustration not an actual tax scenario. Nobody has really explained why dropping the rates is more effective especially for the middle and lower class. We have less deductions than the rich and it will put more money in your pocket to spend out in the economy creating jobs. [/QUOTE]

Verification