Here's a look at the 2011 income tax rats when Obama was President.
President Obama's State of The Union address was well delivered. He said almost everything right – from restoring spending discipline to improving education to allowing everyone access to affordable health care. The one thing President Obama didn't say correctly was regarding taxation. He said illogically not to let millionaires get away with their tax cuts at the expense of X, Y, and Z.
Can anybody guess where the inconsistency is in President Obama's words on income taxes? On the one hand, President Obama attacks millionaires, yet he so strongly pushes to raise taxes on individuals making only $200,000 and couples making $250,000! Last time I checked, someone making $200,000 a year isn't making a million dollars. And someone making $200,000 a year isn't necessarily a millionaire!
SAVING FACE THANKS TO POOR NEGOTIATIONS
I was very disappointed when the Democrats rolled over so easily this past December and accepted Republican's demands for no tax increases. Sure, the Republicans wanted permanent tax rates and settled for a 2 year tax cut extension. However, it's clear the Democrats gave too much. The budget deficit is a big problem, and by not raising taxes we will surely pay for our excesses because it's not enough to just cut spending. Poor children of America.
All President Obama had to do was raise taxes on millionaires, you know, the ones making over a million a year! If you make $1,000,000 a year, there is no way in hell you will be hurting if you have to pay 4% more on any money made over $379,000. Besides, the $379,000 figure is so arbitrary whereas $1 million, although still arbitrary, is less so given the vernacular we use to describe rich people.
There's no way you will ever publicly complain about a 4% tax increase if you are making over a million bucks. You can live in expensive Manhattan, and still live a damn good life earning $1,000,000 paying 39% in Federal taxes. It's not ideal, but it's doable at the margin.
I'm absolutely convinced that Republicans would have agreed to a $1,000,000 income level threshold where tax increases kick in. We have missed the opportunity to raise taxes on the true millionaires and billionaires of America whose revenue we so desperately need to pay down our deficit. Leave the rest of us alone!
2011 Income Tax Rates
|Tax Bracket||Married Filing Jointly||Single|
|10% Bracket||$0 – $17,000||$0 – $8,500|
|15% Bracket||$17,001 – $69,000||$8,501 – $34,500|
|25% Bracket||$69,001 – $139,350||$34,501 – $83,600|
|28% Bracket||$139,351 – $212,300||$83,601 – $174,400|
|33% Bracket||$212,301 – $379,150||$174,401 – $379,150|
|35% Bracket||Over $379,150||Over $379,150|
As you can see from the table above, the more you make the even more you pay. I've long argued for a flat tax to simplify the tax code, raise tax revenue, and provide more incentive for people to do great things. Tack on 5-10% state tax rates and it's understandable why those making ~$200-$500,000 a year who live in expensive cities have something to argue about. Slap on a 40% tax bracket for anything over $1,000,000 to ensure we capture the revenue of our multi-millionaire and billionaire friends and let's pay off the budget deficit!
Take a look at Trump's tax plan for 2017 and beyond.
Related: How To Prepare For A Donald Trump Tax Hike (2017)
Here Are The 2021 Income Tax Rates
For reference, since I'm updating this post 10 years later, let's look at the 2021 income tax rates compared to the 2011 income tax rates. There are lower! But not for long, given Biden plans to raise taxes at least on households making over $400,000 a year.
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2011 Income Tax Rates is a FS original. Income taxes are set to come down under President Trump. As a result, those who contributed to their Roth IRA or Roth 401k and planned on retiring in 2017 – 2021 had wrong tax expectations.