Fiscal Cliff Math: am I doing this right? [View all]

[Proud Public Servant]

Last edited Wed Jan 2, 2013, 12:06 PM - Edit history (1)

Tammy Teacher makes $50,000/year. Her payroll taxes are going up 2%, and she pays payroll tax on 100% of her salary.

Bobby Banker makes $500,000/year. His payroll taxes are also going up 2% -- but thanks to the cap, that only effects 1/4 of his salary. And his income tax is going up 4% -- but only for the portion over $400,000, the final 1/5 of his salary. 2% * 1/4 = 0.5%; 4% * 1/5 = 0.8%; 0.5% + 0.8% = 1.3%.

So Tammy Teacher is seeing a 2% increase in her tax burden, but Bobby Banker is only seeing a 1.3% increase. Where I come from, that's a regressive taxation package. Forgive me while I restrain my elation.