Obama wants payroll tax on incomes above $250,000

[Ron Burgundy]

AP - Democrat Barack Obama said Friday he would apply the Social Security payroll tax to all annual incomes above $250,000, which would affect the wealthiest 3 percent of Americans.

The presidential candidate told senior citizens in Ohio that it is unfair for middle-class earners to pay the Social Security tax "on every dime they make," while millionaires and billionaires pay it on only "a very small percentage of their income."

The 6.2 percent payroll tax is now applied to all income up to $102,000 a year, which covers the entire amount for most Americans. Under Obama's plan, the tax would not apply to incomes between that amount and $250,000. But all annual income above the quarter-million-dollar amount would be taxed under his plan.

Obama has talked before of establishing such a "doughnut hole" in the amount of income subject to the Social Security tax. Friday marked the first time he named a restart level: $250,000 and above.

Obama made the remarks at a retirement facility in Columbus, capital of a state he lost badly to Sen. Hillary Rodham Clinton in the Democratic primary on March 4. Republican John McCain is hoping to carry Ohio this fall, as President Bush did four years ago in his narrow win over Democrat John Kerry.

Obama said his plan "allows us to extend the life of Social Security" without raising the retirement age or cutting benefits. He said McCain "a few years ago" stated that he might consider a higher cap on incomes subject to the tax, "but today he's attacking me for holding the very same position."

Obama also criticized McCain for being open to letting taxpayers invest part of their Social Security payments in private investment accounts.

"Imagine if your security now was tied up with the Dow Jones," he said, alluding to the recent slide in stock prices. "You wouldn't feel very confident about the security of your nest egg."

Obama said he would "limit circumstances when retirement benefits can be cut," and increase the wages and benefits workers could protect in bankruptcy court. Companies would have to disclose more about their pension fund investments, he said. He vowed to end "the outrage of executives getting bonuses while workers watch pensions disappear."

source: http://news.yahoo.com/s/ap/20080613/ap_on_el_pr/obama_social_security [link]

[thewise1]

I'm actually ok with this on its own, although I'd rather see social security phased out.

[kombayn]

Not bad, not the greatest solution in the world but hopefully that means lower & middle class earners can save a bit more cash.

[thewise1]

glad someone moved this...

While I think it's wrong to tax those who make more, more than those who do not, I don't think it's right to NOT tax the rich as much as the poor...

Fair must be fair, even though I'd rather not have the tax at all

[Ardentfrost]

ABC News: They Earn $200,000 and Pay No Taxes

New IRS statistics show 7,389 federal tax returns with $200,000 or more in adjusted gross income reported no federal income taxes in 2005. That's a 161% jump from the 2,833 comparable returns filed in 2004.

Additionally, 4,224 of the over-$200,000 earners reported no worldwide income tax liability on their 2005 returns, the IRS data show. That represents a 75% increase from the 2,420 comparable returns filed in 2004.

It goes on to talk about how they're able to avoid taxes...

I am 100% against taxes, but until none of us have to pay taxes, all mofo's gotta pay em! All that is happening by the IRS opening up these loop holes (even on accident) is that we (normal people) end up having to pay more.

Classically I take the mind set "well, let's fix this by reducing government expenditures and cutting down everyone's tax liabilities," but now it's getting so prevalent that we're going to end up getting hurt more and more.

Let's at least be fair about the unfair taking of our money.

[thewise1]

Originally Posted by Ardentfrost

ABC News: They Earn $200,000 and Pay No Taxes



It goes on to talk about how they're able to avoid taxes...

I am 100% against taxes, but until none of us have to pay taxes, all mofo's gotta pay em! All that is happening by the IRS opening up these loop holes (even on accident) is that we (normal people) end up having to pay more.

Classically I take the mind set "well, let's fix this by reducing government expenditures and cutting down everyone's tax liabilities," but now it's getting so prevalent that we're going to end up getting hurt more and more.

Let's at least be fair about the unfair taking of our money.

werd son

[Phantom]

Is it a coincidence that the $100k to $250k crew is a prime Obama voting group?

I say eliminate the "doughnut" and make things simple.

[WickedLou9]

Originally Posted by Phantom

Is it a coincidence that the $100k to $250k crew is a prime Obama voting group?

I say eliminate the "doughnut" and make things simple.

I'm honestly confused why the donut even exists. I think it was probably an attempt not to raise taxes on what is still considered middle class in some areas. 200,000 a year for a family living outside of NYC in many places is probably middle class. Especially the burbs in northern NJ, outside of Boston and DC as well.

[Ardentfrost]

Is it talking about 200k per family? If so, I disagree with 200k being well off.

I thought it was just talking about single income.

[WickedLou9]

Originally Posted by Ardentfrost

Is it talking about 200k per family? If so, I disagree with 200k being well off.

I thought it was just talking about single income.

Hmm I'm not sure. I think it's actually on a single person's income. If I was earning 200k My wife wouldn't be working though. And not because I want her to stay at home, SHE wants to stay at home with our daughter. We can't afford to do it though. Even if I made 200K and my wife stayed home, we would not be "wealthy". upper-middle class maybe. It really depends on where you live. 200K in West Virigina would be living high on the Hog. I'd probably have a porsche and a mansion. here in NJ, I'd have a nice accord and a 4 bedroom house in the burbs or something.

[Ardentfrost]

Originally Posted by WickedLou9

Hmm I'm not sure. I think it's actually on a single person's income. If I was earning 200k My wife wouldn't be working though. And not because I want her to stay at home, SHE wants to stay at home with our daughter. We can't afford to do it though. Even if I made 200K and my wife stayed home, we would not be "wealthy". upper-middle class maybe. It really depends on where you live. 200K in West Virigina would be living high on the Hog. I'd probably have a porsche and a mansion. here in NJ, I'd have a nice accord and a 4 bedroom house in the burbs or something.

I agree it depends on where you live... but I mean, 200k combined really isn't that much or very unattainable for two educated and hard-working people. I see "rich" as being something above and beyond what could be achieved without very prudent investments or entrepreneurship. My wife and I can each clear 100k doing what we're both doing already.

[Phantom]

The debate as to what is middle class and where is a good one, but I don't think it's really relevant here.

Adjusting a tax system so that it taxes the poor and the very wealthy more or less equally but gives a break to the people in between is asinine IMO. If our goal is to have a progressive tax system, Obama's plan is not a step in that direction.

[Stylerod]

Originally Posted by Ardentfrost

ABC News: They Earn $200,000 and Pay No Taxes



It goes on to talk about how they're able to avoid taxes...

I am 100% against taxes, but until none of us have to pay taxes, all mofo's gotta pay em! All that is happening by the IRS opening up these loop holes (even on accident) is that we (normal people) end up having to pay more.

Classically I take the mind set "well, let's fix this by reducing government expenditures and cutting down everyone's tax liabilities," but now it's getting so prevalent that we're going to end up getting hurt more and more.

Let's at least be fair about the unfair taking of our money.

So there are about 9 million people in the US that make over 200k. And of those about 7000 (or less than 1%) paid no federal taxes? Something doesn't seem right. What were the circumstances that made this possible?

[Ardentfrost]

Originally Posted by Stylerod

So there are about 9 million people in the US that make over 200k. And of those about 7000 (or less than 1%) paid no federal taxes? Something doesn't seem right. What were the circumstances that made this possible?

Read the article. As I said, it outlines the loop holes the people were able to jump through.

[Stylerod]

Originally Posted by Ardentfrost

Read the article. As I said, it outlines the loop holes the people were able to jump through.

It was two. People who gave very large sums of money to Charity, a one time deal because of Katrina. And people who already paid foreign taxes because of working over seas.

I don't see this as a big deal. Especially considering how few people were able to use these write offs.

It's not like these people got to keep their federal $ to buy a new yacht.

[Stylerod]

Originally Posted by Ardentfrost

ABC News: They Earn $200,000 and Pay No Taxes

One thing about this ABC article that I forgot to comment on. The picture of the couple getting onto their private plane.



I guess $200k a year can get you a long way!

I mean, what kind of house can you buy in San Fran earning $200k a year?

[Ardentfrost]

Yeah, of course they're going to make $200k seem like a lot more than it really is because the article is attacking the rich.

All the same, these sorts of loopholes occur all the damn time. I'm against them, and I'm someone who is adamantly against taxes altogether!

[DosEquis]

If you have a 200k salary you likely have other significant sources of income. We have department managers at the place i work that make 200k for a salary, but they also have a few million in other direct and indirect compensation.

I will say the private plane thing is reaching...unless they time share it with like 15 other people.

[Stylerod]

Originally Posted by DosEquis

If you have a 200k salary you likely have other significant sources of income. We have department managers at the place i work that make 200k for a salary, but they also have a few million in other direct and indirect compensation.

I will say the private plane thing is reaching...unless they time share it with like 15 other people.

The story is about people making $200k income. Not $200k base not including bonuses.

[WickedLou9]

Originally Posted by Stylerod

The story is about people making $200k income. Not $200k base not including bonuses.

Maybe he means capital gains and dividends which are not counted as income.