Tax the rich

The current 2 percent payroll tax cut is set to expire on Dec. 31. The legislation would extend the cut through next year, and expand it to 3.1 percent, saving the average American family about $1,500 on their taxes over the next year. The tax cut would also cut in half, from 6.2 percent to 3.1 percent, the tax on the first $5 million in wages to businesses. The $265 billion bill, which will be proposed this week by Sen. Bob Casey, D-Pa., will be fully paid for by a 3.25% surtax on Americans making more than $1 million. Now Senator Reed says he will pay for this by having a surtax of 3.25% on the rich. If you say the rich are the top 1% that means all taxpayers making more than $350,000 per year. In 2010 this group paid $392 billion in taxes or 37% of all taxes paid. If we place a surtax of 3.25% on this group we will collect an additional $13 billion which is far short of paying for the Reed proposal. Note that the Reed bill is on people making more than 1 million not $392,000 so it will collect far less than the $13 billion. Why is no one talking about this shortfall? Reed says this will pay for that and no one checks his figures. I am writing this to a few close friends and I take the time to check and it took me all of 5 minutes to do so. Tax Year 2009 Percentiles Ranked by AGI AGI Threshold on Percentiles Percentage of Federal Personal Income Tax Paid Top 1% $343,927 36.73