Monday, April 19, 2010

why 47% pay no federal income tax

In short, because of the Child Tax Credit, which is a Republican innovation. Kudos to them, I guess, because I'm all for it.

I'd also like to take this moment to post a reminder about marginal tax rates, since I'm starting to see more of this idiocy make its way into newspaper columns. About a year ago I wrote a post on the subject in light of rich idiots who were cleverly thinking up ways to make exactly $249,999 so as to dodge President Obama's tax hike on people making $250k/year.

This is a basic misunderstanding of how the income tax works. If you make $300,000, for instance, Obama's tax hike would only affect the last $50k of income that pushed you over the cap, not the entire $300k. Thus, someone who makes $250,001 will make more money than someone making $249,999. That's how progressive taxes work.

No comments: