Congress Raises Taxes on Everyone
Congress raised taxes - not just on the rich, but on everyone.
On everyone because last year FICA withholdings were temporarily reduced - supposedly so that we'd spend more money and make the economy hum. So I guess the economy's now humming, since the Congress decided we didn't need the extra money to spend.
As for "the rich," they've had their top marginal tax rate increased to 39.6%. Now they'll be paying more of their "fair share" to help, er, I think it's supposed to be to help reduce the deficit. We've already discussed how and why this won't work (HERE and HERE).
And, sure enough, consistent with what we already discussed then, Goldman Sachs took the lead in showing why this tax policy isn't going to do what it's designed to do:
So our first taste of complete nonsense, or perhaps blatant lying, was dropped on our plates to start off the New Year. Congress claims they're going to tax the rich to raise more revenue. Goldman's execs - truly rich people - take compensation in anticipation of that action, avoiding the increased taxes. (Oh, and do you think maybe they were privy to what was going to be resolved so they could avoid the taxes?) Do you think other rich people will also adjust how they earn their money so that they will avoid - as much as possible - any increased taxes? Both our reason (our ability to think clearly) and common sense (based on our experience) tell us they will.
And let's not forget the lawyers and accountants who will benefit from concocting schemes to help the rich avoid taxes. (NB: Avoiding tax is legal, by the way; and professionals who are paid to help people avoid taxes aren't doing anything illegal or unethical.)
Meanwhile, most of the rest of you will simply pay more taxes this year. That's the real bottom line to all the hoopla the media has stirred up these last few weeks.
On everyone because last year FICA withholdings were temporarily reduced - supposedly so that we'd spend more money and make the economy hum. So I guess the economy's now humming, since the Congress decided we didn't need the extra money to spend.
As for "the rich," they've had their top marginal tax rate increased to 39.6%. Now they'll be paying more of their "fair share" to help, er, I think it's supposed to be to help reduce the deficit. We've already discussed how and why this won't work (HERE and HERE).
And, sure enough, consistent with what we already discussed then, Goldman Sachs took the lead in showing why this tax policy isn't going to do what it's designed to do:
(Reuters) - Ten senior Goldman Sachs Group Inc (GS.N) executives, including Chief Executive Lloyd Blankfein, were on New Year's Eve given stock pegged to earlier restricted awards worth tens of millions of dollars.More...
So our first taste of complete nonsense, or perhaps blatant lying, was dropped on our plates to start off the New Year. Congress claims they're going to tax the rich to raise more revenue. Goldman's execs - truly rich people - take compensation in anticipation of that action, avoiding the increased taxes. (Oh, and do you think maybe they were privy to what was going to be resolved so they could avoid the taxes?) Do you think other rich people will also adjust how they earn their money so that they will avoid - as much as possible - any increased taxes? Both our reason (our ability to think clearly) and common sense (based on our experience) tell us they will.
And let's not forget the lawyers and accountants who will benefit from concocting schemes to help the rich avoid taxes. (NB: Avoiding tax is legal, by the way; and professionals who are paid to help people avoid taxes aren't doing anything illegal or unethical.)
Meanwhile, most of the rest of you will simply pay more taxes this year. That's the real bottom line to all the hoopla the media has stirred up these last few weeks.
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