Taxes, My son gets it!

JeffDG said:
How is having someone who makes $100,000 pay twice as much as someone who makes $50,000 regressive?
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As I understand the terms, that would be neither regressive nor progressive, but would be whatever we call the line that separates the two terms, sort of like "neutral".

Sometimes the idea of a flat percentage rate is proposed as a "fair tax", but of course there's nothing fair about it, as the guy who makes twice as much has to pay twice as much. Even a flat rate places disproportionate burden on those with higher incomes.
Why does it have to be 2.5x?
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Because we understand the burden of income taxes to be a function of the percentage of your "disposable" income, and we understand that to increase as a percentage of your overall income as your income rises.

There are lots of other arguments for progressive taxation, including the notion that the wealthy derive greater benefits from government, and that it serves as back-pressure against aristocracy, to counteract the effect of "wealth begets wealth".
-harry
 
SkyHog said:
I'd rather it unfair to the poor than unfair to the rich.

The rich actually spend money.

Aside from Big Screen TVs and new cars and homes they can't afford, the poor don't spend money at all.
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You forgot lottery tickets. :D
 
RJM62 said:
Actually, Scott, I beg to differ.
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What did the paper define an average workers as?

I do not disagree with you, but you may be arguing apples to oranges. You need to know how they derived their numbers and that is a detail in the paper. It is not my claim, it is the number that is reported by the Australian government. So if you differ with them, then point what is wrong with their definition, giving your definition really does not help explain the differences.
 
tdager said:
Actually Scott I DO stand corrected.....see this: http://www.forbes.com/global/2009/0413/034-tax-misery-reform-index.html

New Zealand on the other hand sure seems nice and is taxed less than us!

BTW...while I understand the rates and such, it still boggles my mind the amount of wealth transfer/tax the wealthy we have going on in this country. I know you disagree, that is fine, I just find it mind boggling how so many can say "take from them" and not even think about it.
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Interesting chart. Thanks for posting to that.

It also clearly shows how little we are taxed compared to the industrial world. Most of the countries that are taxed less than us are not all that desirable to be living, there are a few exceptions. But it is clear that we have it better than most of the world and are seemingly the biggest tax whiners on the planet! :D
 
Everskyward said:
Looking at that table, NZ is not all that different from us in tax rates plus, although I'm sure it is a beautiful place, I can't see companies flocking there because of the business opportunity.
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New Zealand is a wonderful place in an unfortunate location for access to major markets. That more than anything else will affect the business climate.
 
smigaldi said:
Then explain the fire department?

...

So spare us the ideological "government does nothing efficiently' talk and remember that when it comes to blowing junk up no one does it better than the US Government!

BTW which private entity came up with the Internet?
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Scott, that was a low blow -- I acknowledge the necessity of government's involvement in the same sentence you excerpted, and you cite one excellent exemplar, and we all know that there are others. We could carry this on, but I don't feel the need to get detailed lest we "spin it up," and I don't do spin.

smigaldi said:
I think Spike might be referring to some of the laws that Congress exempts themselves from.

http://www.time.com/time/magazine/article/0,9171,967427,00.html

This article has a listing of a whole bunch of the 'some pigs are more equal' things he is referring to.

What is interesting is that article is from 1988 and nothing has really changed. Not even after 1994 Republican revolution.
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Precisely exactly on point, in all respects. It is not partisan behavior, it is the logical self-interested action of the true regal class.

smigaldi said:
That is a tax on people who stink at math.
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...and I love even better that some lotto players actually pay money for newsletters with the "good numbers" in 'em - that's a surtax, I guess.
 
smigaldi said:
That is a tax on people who stink at math.
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A lot of those down here in GA. This week they've added the Powerball to the Megamillions. Four times each week to be able to retire. :rolleyes:
 
EppyGA said:
A lot of those down here in GA. This week they've added the Powerball to the Megamillions. Four times each week to be able to retire. :rolleyes:
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I think if you look across the country there is an even distribution. BTW they added powerball to the Illinois Lotto this week as well. If you think about it, the lottery is the government farming out tax collection. The lotteries are authorized by the government and then a lot of time contracted out to a private company to manage. A percentage of what they collect goes back to the states to fund government programs. It is as if you $1 for a lottery ticket and $.50 of government services. It really is a type of tax. One that I am happy to let others pay.
 
Interesting discussion, and I'm glad it's stayed out of SZ, as I've learned a lot from the interchange here.

So tell me; what's wrong with http://www.fairtax.org, if anything? Is it a good proposed plan?

It's gone to committee, and the organizations that have weighed in on it so far are all in support, none opposed: http://www.govtrack.us/congress/bill.xpd?bill=h111-25
 
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smigaldi said:
I think if you look across the country there is an even distribution. BTW they added powerball to the Illinois Lotto this week as well. If you think about it, the lottery is the government farming out tax collection. The lotteries are authorized by the government and then a lot of time contracted out to a private company to manage. A percentage of what they collect goes back to the states to fund government programs. It is as if you $1 for a lottery ticket and $.50 of government services. It really is a type of tax. One that I am happy to let others pay.
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I've heard the lottery described as a tax on the stupid. I guess I'm not immune, though, we toss $1 into the pot every month or so.
 
TangoWhiskey said:
Interesting discussion, and I'm glad it's stayed out of SZ, as I've learned a lot from the interchange here.

So tell me; what's wrong with http://www.fairtax.org, if anything? Is it a good proposed plan?
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There are about 50 threads in the SZ on what is wrong with the fairtax. Instead of starting one out here sign up and search in there. ....please

Why this thread is not there in the SZ already is a mystery, this is exactly the type of thread that normally is going on in the zone.
 
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smigaldi said:
There are about 50 threads in the SZ on what is wrong with the faritax. Instead of starting one out here sign up and search in there. ....please

Why this thread is not there in the SZ already is a mystery, this is exactly the type of thread that normally is going on in the zone.
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Cool, Scott; didn't know that as I'm not normally in SZ. Will go look there. Would like to keep this one out of SZ.
 
TangoWhiskey said:
Cool, Scott; didn't know that as I'm not normally in SZ. Will go look there. Would like to keep this one out of SZ.
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When you do go searching look for the posts by RevSlappy and KennyFlys. Fair Tax was their happy place in the zone. Just be sure to 'READ THE BOOK' first (that is an inside the SZ joke BTW) :rofl::rofl:
 
I have no clue what you are saying Dave.
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Precisely what I was getting at when I said:

I think they rely on most people not understanding it,
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Here, think of it this way:
When you fill out your 1040EZ or whatever form you use, is there a line under the Deductions section that says, "Income tax paid"?

No. Tax payments are not deductible.
If they are not deductible, then they are paid with taxable income. IOW, tax is taxable.
 
More explanation:

You pay your tax bill with after-tax income. There is no deduction for tax payments. All different ways of saying the same thing. Tax is taxed.

Here’s an example:
Let’s say you earn $10000 in 2009, and the tax bill is 10% or $1000.
So it is now 2010 and you take a paycheck from this year and make your tax payment. (there is no difference for this scenario if you pay by paycheck deductions)
You pay $1000 out of 2010 after-tax income, for this 2009 tax bill.

Now roll ahead to the beginning of 2011 - you do your 2010 return in Jan 2011, and calculate, pay your 2010 taxes. The $1000 you used to pay 2009 taxes was paid with 2010 income, and that money was taxed income - there was no deduction for the $1000 on the return. So in 2011 you now owe 10% of the $1000 as tax - $100.

Now move forward to 2012. You worked all 2011 and now it is Jan. 2012 and you are figuring your 2011 return. Remember that $100 you used to pay your 2010 tax obligation, with after-tax 2011 income? It is now taxable on the 2011 return!

AND you are paying the same type of tax on a tax on a tax for each year's $1000!

I would love nothing better than to be proven wrong here.
 
Let'sgoflying! said:
Now roll ahead to the beginning of 2011 - you do your 2010 return in Jan 2011, and calculate, pay your 2010 taxes. The $1000 you used to pay 2009 taxes was paid with 2010 income, and that money was taxed income - there was no deduction for the $1000 on the return. So in 2011 you now owe 10% of the $1000 as tax - $100.
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You're double counting.

If you earn $10000 every year, and you pay 10% income tax, then you pay $1000 in tax every year. That's it, end of story.

You keep trying to say that you're paying $1000 in income tax on your $10,000 in income, along with $100 in taxes on the $1000 you use to pay your tax bill, but you're double-counting. The tax you pay on that $1000 of income was already counted when you figured out the taxes on the $10000.

If you paid taxes on the $10000, and then taxes again on the $1000 in income you use to pay last year's taxes, you'd have ended up paying taxes on that $1000 in income twice; once by itself, and once again because it was part of the $10000. That would be double-counting, it's not correct.

Imagine you got two paychecks during the year, one for $9000 and another for $1000. You would have $10,000 total income, and thus owe $1000 total tax. Assuming there was no such thing as withholding, nor quarterly filings, then each year you'd take your $1000 paycheck and give it to the government to pay for last year's taxes. Of that $1000, $900 of it goes to pay for the taxes on last year's $9000 paycheck, and $100 of it goes to pay the taxes on last year's $1000 paycheck.

After using the $1000 paycheck to pay taxes, you'd have the $9000 paycheck to spend as you like.
-harry
 
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Let'sgoflying! said:
More explanation:

You pay your tax bill with after-tax income. There is no deduction for tax payments. All different ways of saying the same thing. Tax is taxed.

Here’s an example:
Let’s say you earn $10000 in 2009, and the tax bill is 10% or $1000.
So it is now 2010 and you take a paycheck from this year and make your tax payment. (there is no difference for this scenario if you pay by paycheck deductions)
You pay $1000 out of 2010 after-tax income, for this 2009 tax bill.

Now roll ahead to the beginning of 2011 - you do your 2010 return in Jan 2011, and calculate, pay your 2010 taxes. The $1000 you used to pay 2009 taxes was paid with 2010 income, and that money was taxed income - there was no deduction for the $1000 on the return. So in 2011 you now owe 10% of the $1000 as tax - $100.

Now move forward to 2012. You worked all 2011 and now it is Jan. 2012 and you are figuring your 2011 return. Remember that $100 you used to pay your 2010 tax obligation, with after-tax 2011 income? It is now taxable on the 2011 return!

AND you are paying the same type of tax on a tax on a tax for each year's $1000!

I would love nothing better than to be proven wrong here.
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I'll try... Your premise of earning $10000 taxed at 10% must be taxable income. To get that much taxable, you must have earned perhaps $19,350 or more before exemptions and standard deduction. It is supposed to be a pay as you go system, so withholding is normally deducted. If you had $1000 deducted in 2010, then you would OWE nothing at the end of the year. But, you did pay $1000 for 2010 from the money you earned in 2010. If you had nothing withheld, then you would OWE $1000 at the end of the year or in 2011 because you did not pay it yet by the end of 2010. This money is from your 2010 earnings and are not taxed again in 2011.
 
Continue to try to convince me.
However, if there is no deduction allowed for a purchase (in this case, a tax payment), then that purchase is made with taxable dollars.
 
Let'sgoflying! said:
Continue to try to convince me.
However, if there is no deduction allowed for a purchase (in this case, a tax payment), then that purchase is made with taxable dollars.
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Yes, the tax for which you pay in your next year's tax payment, when you pay $900 in income tax on the $9000 in income that you got to keep, and $100 in income tax on the $1000 in income that you had to give the government to pay the prior year's taxes.
-harry
 
Let'sgoflying! said:
More explanation:

You pay your tax bill with after-tax income. There is no deduction for tax payments. All different ways of saying the same thing. Tax is taxed.

Here’s an example:
Let’s say you earn $10000 in 2009, and the tax bill is 10% or $1000.
So it is now 2010 and you take a paycheck from this year and make your tax payment. (there is no difference for this scenario if you pay by paycheck deductions)
You pay $1000 out of 2010 after-tax income, for this 2009 tax bill.

Now roll ahead to the beginning of 2011 - you do your 2010 return in Jan 2011, and calculate, pay your 2010 taxes. The $1000 you used to pay 2009 taxes was paid with 2010 income, and that money was taxed income - there was no deduction for the $1000 on the return. So in 2011 you now owe 10% of the $1000 as tax - $100.

Now move forward to 2012. You worked all 2011 and now it is Jan. 2012 and you are figuring your 2011 return. Remember that $100 you used to pay your 2010 tax obligation, with after-tax 2011 income? It is now taxable on the 2011 return!

AND you are paying the same type of tax on a tax on a tax for each year's $1000!

I would love nothing better than to be proven wrong here.
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But Dave, in 2009, you payed $0 out of pocket in taxes.
 
smigaldi said:
What did the paper define an average workers as?

I do not disagree with you, but you may be arguing apples to oranges. You need to know how they derived their numbers and that is a detail in the paper. It is not my claim, it is the number that is reported by the Australian government. So if you differ with them, then point what is wrong with their definition, giving your definition really does not help explain the differences.
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I disagree with the conclusion, which seems to be a widely-held fallacy, that U.S. taxes are lower than in most industrialized nations.

I don't think the paper (nor most other comparisons, formal or casual) takes into account all of the other taxes that Americans pay in addition to federal and state/local income taxes.

Some taxes, like the bridge and tunnel tolls where I live, cost several thousands dollars a year. And no, I can't consider them as "user fees" because the revenue does not go to support the resource that is being used. The bridges are falling down due to neglect, while the toll revenue is diverted almost in its entirety to mass transit. So it's a tax, not a user fee.

The tax that irks me the most is the LLC tax filing tax, which literally is a tax imposed for the privilege of filing my tax return.

The other factor that has to be considered is what is received in return for taxes paid. And frankly, I have no idea what Australians receive, other than medical care. I've never been to Australia and I don't know any Australians well enough to ask.

I do have a lot of friends in Canada, however, and I've been there quite a bit. Canadian taxes are are higher than in the U.S. at first glance, but they also get some sort of tax rebate ("prebate" may be a better description) based on family size. I think it's four times a year. I think they also get some sort of subsidy to buy school supplies for their children.

They also get most of their medical care for free, although most of my Canadian friends say HealthCanada is okay for routine preventative care, but sucks if you actually get sick. One even stayed at my place while paying cash to have a series of diagnostic tests performed in New York, rather than waiting three or four months to have them done in Canada.

But for whatever it's worth, they do get some sort of health care in Canada. Not that I advocate doing the same here, mind you. I'm just pointing out that there is some tangible return.

So yeah, you're right. It's apples and oranges to compare national taxation rates, for many reasons. I just get a bit miffed and perplexed when people tell me that my taxes are low, when more than half the money I take in goes into government hands -- while I struggle to pay the rent, lights, etc. every month.

-Rich
 
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RJM62 said:
I do have a lot of friends in Canada, however, and I've been there quite a bit. Canadian taxes are are higher than in the U.S. at first glance, but they also get some sort of tax rebate ("prebate" may be a better description) based on family size. I think it's four times a year. I think they also get some sort of subsidy to buy school supplies for their children.
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I think you're talking about the GST credit. That only applies to people who make less than $30k or so (can't remember the number, I didn't get it for a long time).

They also get most of their medical care for free, although most of my Canadian friends say HealthCanada is okay for routine preventative care, but sucks if you actually get sick. One even stayed at my place while paying cash to have a series of diagnostic tests performed in New York, rather than waiting three or four months to have them done in Canada.
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3-4 months is nothing in Canada...and it's a crime to pay out of pocket for services in Canada, hence them coming to visit you in the States! In Canada you have an absolute right to get on a waiting list. Actual care, not-so-much.
 
JeffDG said:
I think you're talking about the GST credit. That only applies to people who make less than $30k or so (can't remember the number, I didn't get it for a long time).
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Thanks for clarifying that.

JeffDG said:
3-4 months is nothing in Canada...and it's a crime to pay out of pocket for services in Canada, hence them coming to visit you in the States! In Canada you have an absolute right to get on a waiting list. Actual care, not-so-much.
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The entire series of tests (CT scan, MRI, readings by the radiologist, a trip to a gastroenterologist to review the results, and some assorted lab tests) took two days where I live in Queens, which is a borough of New York City. The other two days was spent visiting art museums in Manhattan, as he's an artist.

-Rich
 
RJM62 said:
Thanks for clarifying that.



The entire series of tests (CT scan, MRI, readings by the radiologist, a trip to a gastroenterologist to review the results, and some assorted lab tests) took two days where I live in Queens, which is a borough of New York City. The other two days was spent visiting art museums in Manhattan, as he's an artist.

-Rich
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You'd probably be 3 months for a referral to a specialist, a month or so to get an MRI, another month for CT, a couple months to get a radiologist to look at them, then 3 months to get back to see the gastroenterologist after the scans...

Navigated that system way too many times to count. My health insurance here in TN is less than my provincial income tax in Alberta, and there's no state income tax here in TN, plus the gas taxes, federal taxes, etc. are less down here. My daughter got in to see a pediatric endocrinologist in a couple of weeks and was into an MRI the next day. When she was younger (in Alberta), we were told that we would get a call from another specialist in 3-6 months with an appointment date.:yikes:
 
The bottom 40% of wage earners. Yes that's 40%, pay NO Federal Income Tax.
 
Anthony said:
The bottom 40% of wage earners. Yes that's 40%, pay NO Federal Income Tax.
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Those school kids working part time need to start caring their own weight!!! :rolleyes::rolleyes:

http://www.taxfoundation.org/research/show/206.html

Zero-tax tax filers tend to be low-income, working part-time or full-time for only part of the work year. Indeed, 42 percent will be working part-time or hardly at all, while another 20 percent will be working full time but less than 50 weeks out of the year. Just 38 percent of zero-tax filers will be working full-time for all of 2004.
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Zero-tax filers in 2004 will be overwhelmingly young. More than one-third (36 percent) are younger than age 25
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The overwhelming majority of tax returns that will pay no income taxes will be filed by single individuals
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Anthony said:
The bottom 40% of wage earners. Yes that's 40%, pay NO Federal Income Tax.
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It's all Bush's fault! :D:D Those pesky tax cuts again.

Tax Foundation economists estimate that for tax year 2004, a record 44 million tax returns will be correctly demanding the return of every dollar (or more) that is being withheld from their paychecks during the year. In other words, after taking all the available credits and deductions, they will owe no income taxes and Uncle Sam may well owe them. Of course, this is quite different from the situation of people who have paid a great deal in income taxes throughout the year but are getting a small refund because the government withheld even more than the amount due.

The group of zero-tax filers is growing rapidly because of the Bush tax cuts. It was 29 million in 2000, and it will be 44 million in 2004, a 50 percent increase. (See Table 1.)

(From the Tax Foundation link that Scott provided.)

Gary
 
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Gary said:
It's all Bush's fault! :D:D Those pesky tax cuts again.

Tax Foundation economists estimate that for tax year 2004, a record 44 million tax returns will be correctly demanding the return of every dollar (or more) that is being withheld from their paychecks during the year. In other words, after taking all the available credits and deductions, they will owe no income taxes and Uncle Sam may well owe them. Of course, this is quite different from the situation of people who have paid a great deal in income taxes throughout the year but are getting a small refund because the government withheld even more than the amount due.

The group of zero-tax filers is growing rapidly because of the Bush tax cuts. It was 29 million in 2000, and it will be 44 million in 2004, a 50 percent increase. (See Table 1.)

(From the Tax Foundation link that Scott provided.)

Gary
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Make the tax system more equitable, repeal the Bush tax cuts!

:D
 
wbarnhill said:
Make the tax system more equitable, repeal the Bush tax cuts!

:D
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Fine by me - let's all share the pain!:yes:

As an interesting side note, while perusing the new 2011 Federal budget, notice that the administration is forecasting an increase in Federal income taxes from a 2009 level of $915 billion to $1,271 billion in 2012. With all the tax cuts being bandied about (? 95% of alll taxpayers will see a cut?), would be interesting to see the detail of where that additional $350 billion will come from. Are there really that many rich people out there?

Gotta love budget documents, the best in science fiction - ever!

Gary
 
Gary said:
With all the tax cuts being bandied about (? 95% of alll taxpayers will see a cut?)...
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Already have, for "95% of working families".
... would be interesting to see the detail of where that additional $350 billion will come from...
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I would assume that the bulk of it is simply a forecast of increased revenue from a return to a growing economy. A big chunk is allowing the expiration of the Bush tax cuts, taking the higher brackets back to where they were in 2001.-harry
 
Gary said:
Fine by me - let's all share the pain!:yes:
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The problem is that people like you and me are sharing the pain while 43% of the Americam public is mostly taking from our pain.

The Tax Policy Center estimates that for 2009, 43% of tax units (most of which are lower income households that may or may not file a return) will have no income tax liability or will have a negative income tax liability, meaning the government will actually pay them.
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We're "sharing" allright. Its more like armed robbery.

http://money.cnn.com/2009/04/15/pf/taxes/who_pays_most_least/index.htm
 
mantakos said:
Already have, for "95% of working families".

I would assume that the bulk of it is simply a forecast of increased revenue from a return to a growing economy. A big chunk is allowing the expiration of the Bush tax cuts, taking the higher brackets back to where they were in 2001.-harry
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I suspect you are correct on the source of the increased tax revenue, but I really can't explain it. But, I wonder if it is a reasonable assumption. With unemployment over 10% and the general economic downturn, revenue is likely to suffer. The link to the CNN Money article was interesting, most of the examples cited increased the budget deficit. It's hard to judge the effect of the exemptions/credits. Most seem to phase out with incomes over $75,000.

I'm still wrestling with the concept of the budget clearly anticipating increased Federal income tax revenue, yet promising tax cuts to 95% of working families. Is this the "cut taxes - raise revenue" theory of a past president?

BTW - how do you (not a personal "you") define "working families":D

Gary
 
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