Upper-Income taxpayers look for ways to sidestep Obama tax-hike plan...

[posty 2,867]

http://abcnews.go.com/Business/Economy/sto...5547&page=1

 

President Barack Obama's tax proposal which promises to increase taxes for those families with incomes of $250,000 or more -- has some Americans brainstorming ways to decrease their pay, even if it's just by a dollar.

 

A 63-year-old attorney based in Lafayette, La., who asked not to be named, told ABCNews.com that she plans to cut back on her business to get her annual income under the quarter million mark should the Obama tax plan be passed by Congress and become law.

 

So far, Obama's tax plan is being looked at skeptically by both Democrats and Republicans and therefore may not pass at all.

 

"We are going to try to figure out how to make our income $249,999.00," she said.

 

"We have to find a way out where we can make just what we need to just under the line so we can benefit from Obama's tax plan," she added. "Why kill yourself working if you're going to give it all away to people who aren't working as hard?"

 

The attorney says that in order to decrease her income she'll have to let go of clients, some of whom she's been counseling for more than a decade.

 

"This means I'll have to tell some of my clients we can't help them and being more selective in general about who we help," she said. "I hate to do it."

 

Obama's budget proposal calls for $989 billion in new taxes over the next 10 years, most of which will be earned from increased taxes on individuals who make more than $200,000 and from families who make more than $250,000.

 

The expiration of the Bush administration's tax cuts at the end of 2010 would garner an estimated $338 billion, $179 billion would come from the elimination of some itemized deductions for higher-income taxpayers and $118 billion would be brought in from a hike in the capital gains tax. The remaining $353 billion would come from taxes on businesses.

 

Dr. Sharon Poczatek, who runs her own dental practice in Boulder, Colo., said that she too is trying to figure out ways to get out of paying the taxes proposed in Obama's plan.

 

"I've put thought into how to get under $250,000," said Poczatek. "It would mean working fewer days which means having fewer employees, seeing fewer patients and taking time off."

 

"Generally it means being less productive," she said.

 

"The motivation for a lot of people like me dentists, entrepreneurs, lawyers is that the more you work the more money you make," said Poczatek. "But if I'm going to be working just to give it back to the government -- it's de-motivating and demoralizing."

 

Can Obama's Tax Plan Be Gamed?

 

Gary Schatsky, a financial adviser and the president of N.Y.-based Objectiveadvice.com, said that it is possible to successfully remove yourself from the bracket Obama plans to target in his new plan.

 

"It's very possible that there are plenty of things you can do with general tax planning techniques attempting to recognizes loses, pushing gains to years when your income is lower and increasing retirement plan contributions to come below $250,000," said Schatsky.

 

"But Obama's proposal has yet to be hammered out and the devil is in the details," he added.

 

Because we have a marginal tax system, said Schatsky, what Obama's plan means is that the amount of tax you pay on each incremental dollar is higher only when your income is pushed into a higher tax bracket.

 

"But to focus keeping your income below a quarter million dollars is not going to have any spectacular magic for individual tax payers," said Schatsky. "The difference between $249,999 and $251,000 will probably have zero tax impact."

 

Schatsky said that the incentive to get under $250,000 may be more so if the tax plan outlines that an individual who goes over a prescribed limit would face a reduced value of their itemized deductions.

 

"If the value of all your itemized deductions goes from a 33 percent level to a 28 percent level than there would be a reason for people to do dramatic things to reduce their incomes," said Schatsky.

 

Peter Morici, a professor of business at The Robert H. Smith School of Business at the University of Maryland, agrees that while it may be possible to sneak around the taxes, it won't be as simple as some may think.

 

"You have to be pretty close to $250,000 in terms of your income to get underneath it," said Morici.

 

Does Obama Tax Plan Promote Class Warfare?

 

Morici says that he believes Obama's tax proposal could spark a kind of class war.

 

"What Obama is doing is pitting the poor against the upper middle class," said Morici. "He'll tax the rich for the health benefits everyone else wants."

 

Obama has said the new taxes on those making over $250,000 would go toward a fund that would support a gradual move to universal health care coverage.

 

Supporters of Obama's budget plans say that those who are at the top and complaining need to look at the bigger picture.

 

"Those who are going to be taxed more are obviously going to complain but I think they may miss the point," said Lisa Rotenstein, the chair of the Harvard Healthcare Policy Group at the Institute of Politics.

 

"This could have broader implications for the American economy as a whole improved health care means a healthier workforce that is more productive," said Rotenstein.

 

But Colorado dentist Poczatek says those who support the increase in taxes misunderstand what it means for those who will end up paying more.

 

"I'd like these people to know that we pay a lot of taxes, and have been paying a lot of taxes through the past administration," said Pcozatek.

 

"We make a lot of money, it's true, but we also already pay a lot of taxes," she said.

 

"So maybe we got a little bit successful but we worked very hard," she said. "It's taken us over 30 years and it didn't happen overnight. Every day is a lot of work.

 

"We're working for it and we're still overtaxed."

[GettnHuge 2]

"Why kill yourself working if you're going to give it all away to people who aren't working as hard?"

 

[NewbieJr 541]

Do you think Holliday and Giambi will put Oakland back in the playoff hunt?

[Brad GLuckman 519]

"It would mean working fewer days which means having fewer employees, seeing fewer patients and taking time off."

"Generally it means being less productive," she said.

 

"The motivation for a lot of people like me dentists, entrepreneurs, lawyers is that the more you work the more money you make," said Poczatek. "But if I'm going to be working just to give it back to the government -- it's de-motivating and demoralizing."

 

 

EXACTLY

[mayhem39 3]

Can't say I blame them.

[NewbieJr 541]

Rich dudes. Always trying to buck the system.

[RLLD 4,283]

Unintended consequences.....

[jerryskids 7,251]

Rich dudes. Always trying to buck the system.

Why bother? Just don't pay them, and you get a cabinet nomination.

[NorthernVike 2,113]

["We are going to try to figure out how to make our income $249,999.00," she said.

 

What a stupid statement.

 

 

Make the money, pay the focking taxes. Look at the alternatives.......

 

 

I say here you go Nancy, pisss it away. If it aint you doin it, it will just be someone else next year.

[itsbigmoni 1]

Wow, some people are focking retards. The tax bracket isn't the same rate for ALL of your income. For the first 50k, EVERYONE gets taxed the same.

 

For the stupid attorney, she'll have more income when she makes 251k compared to 249k. She'll only pay a higher tax rate on income after 250k, meaning, for the first 249k, she'll pay the same focking amount, and then on 250-251k she'll pay a higher rate. It is impossible to make a higher gross income but a lower net income because of taxes.

 

If taxes up to 250k are 30% and taxes on income are 50% she would still make more money if she made 251k.

 

0-250k- taxed at 30%

250-251k - taxed at 50%

 

See it? She would make an extra $500.

 

There is no focking way she doesn't know this. I can't believe abcnews reported on some ignorant sh1t like that. I also can't believe you guys, who are generally smart, didn't notice this.

[Recliner Pilot 61]

Wow, some people are focking retards. The tax bracket isn't the same rate for ALL of your income. For the first 50k, EVERYONE gets taxed the same.

 

For the stupid attorney, she'll have more income when she makes 251k compared to 249k. She'll only pay a higher tax rate on income after 250k, meaning, for the first 249k, she'll pay the same focking amount, and then on 250-251k she'll pay a higher rate. It is impossible to make a higher gross income but a lower net income because of taxes.

 

If taxes up to 250k are 30% and taxes on income are 50% she would still make more money if she made 251k.

 

0-250k- taxed at 30%

250-251k - taxed at 50%

 

See it? She would make an extra $500.

 

There is no focking way she doesn't know this. I can't believe abcnews reported on some ignorant sh1t like that. I also can't believe you guys, who are generally smart, didn't notice this.

 

She didn't say what you claim she said.

 

Her point is why work your ass off for anything over $250K when Obama is gonna take the majority of it? It's better to cut back, take time off, and not get hammered on your money over and above $250k.

[cbfalcon 828]

So when these people are given 2 choices:

 

1. Bring home more cash for themselves but pay more in taxes.

2. Bring home less cash for themselves just so they don't have to pay as many taxes.

 

They choose to hurt themselves just to hurt the government. Why do they hate our country?

[itsbigmoni 1]

All this over 3%? These people are lying and they're stupid. If they earned 500k and they kept that same workload, their net income would go down by a whopping $7500. So there are willing to reduce their income down to 250k just so they don't have to pay an extra $7500?

 

And even the $7500 number is misleading. Thats just the extra tax they'll pay for their income above 250k. You would still have to subtract the savings they would make on their income up to 250k. If i remember correctly, people making up to 200k would see a savings of like 2k or something. So in reality, they'd be paying n extra $5500.

[pimptastic69 0]

All this over 3%? These people are lying and they're stupid. If they earned 500k and they kept that same workload, their net income would go down by a whopping $7500. So there are willing to reduce their income down to 250k just so they don't have to pay an extra $7500?

 

And even the $7500 number is misleading. Thats just the extra tax they'll pay for their income above 250k. You would still have to subtract the savings they would make on their income up to 250k. If i remember correctly, people making up to 200k would see a savings of like 2k or something. So in reality, they'd be paying n extra $5500.

 

I'm no accountant, but I don't think that's right. Unless Obama has managed to change the way the IRS levies taxes, once you hit the $250K mark, ALL of your income gets taxed at the higher tax bracket.

[itsbigmoni 1]

I'm no accountant, but I don't think that's right. Unless Obama has managed to change the way the IRS levies taxes, once you hit the $250K mark, ALL of your income gets taxed at the higher tax bracket.

 

We need jerry to clear this up, but i'm 95% sure, everybody's income gets taxed the same.

[KSB2424 3,174]

There is no focking way she doesn't know this. I can't believe abcnews reported on some ignorant sh1t like that. I also can't believe you guys, who are generally smart, didn't notice this.

Ummm the reason that the lady, ABC, and we don't know this is because you just made it up. You might want to delete this post.

[Uh-huh 0]

I'm no accountant, but I don't think that's right. Unless Obama has managed to change the way the IRS levies taxes, once you hit the $250K mark, ALL of your income gets taxed at the higher tax bracket.

Progressive taxation down?

[wiffleball 4,799]

I'm no accountant, but I don't think that's right. Unless Obama has managed to change the way the IRS levies taxes, once you hit the $250K mark, ALL of your income gets taxed at the higher tax bracket.

 

Well, if it helps, I AM a Tax Accountant. Moni's been right all along. But even if I wasn't? I can read:

 

 

Because we have a marginal tax system, said Schatsky, what Obama's plan means is that the amount of tax you pay on each incremental dollar is higher only when your income is pushed into a higher tax bracket.

[wiffleball 4,799]

Ummm the reason that the lady, ABC, and we don't know this is because you just made it up. You might want to delete this post.

 

Nope. Man, don't you guys ever do your own taxes at least? - Or do you just read the little tables at the back of the book?

[KSB2424 3,174]

Nope. Man, don't you guys ever do your own taxes at least? - Or do you just read the little tables at the back of the book?

I went back and read his post. I mis-interpreted what he said (I originally skimmed his post). :pullsfootoutofmouf: then :eatscrow:

[pimptastic69 0]

Progressive taxation down?

 

That article makes me glad I'm not an accountant. Thanks for clearing that up.

[wiffleball 4,799]

So when these people are given 2 choices:

 

1. Bring home more cash for themselves but pay more in taxes.

2. Bring home less cash for themselves just so they don't have to pay as many taxes.

 

They choose to hurt themselves just to hurt the government. Why do they hate our country?

 

See, this is the result of the Joe The Plumber/McCain/Limblob environment.

 

"Why should I work if I have to give it all away?"

 

You focking numbnutz. You don't even know the basics of our tax system? Moni's all over this. You're paying an few % on your income above a certain level. - But yeah, you're "giving it ALL away". I could see this on Fox, but not ABC. Morons.

 

Hey - here's a tip: If you don't work at ALL? You won't pay ANY taxes!

[wiffleball 4,799]

I went back and read his post. I mis-interpreted what he said (I originally skimmed his post). :pullsfootoutofmouf: then :eatscrow:

[itsbigmoni 1]

I went back and read his post. I mis-interpreted what he said (I originally skimmed his post). :pullsfootoutofmouf: then :eatscrow:

 

I know my posts can be confusing as naomi's on occasion.

[KSB2424 3,174]

See, this is the result of the Joe The Plumber/McCain/Limblob environment.

 

"Why should I work if I have to give it all away?"

 

You focking numbnutz. You don't even know the basics of our tax system? Moni's all over this. You're paying an few % on your income above a certain level. - But yeah, you're "giving it ALL away". I could see this on Fox, but not ABC. Morons.

 

Hey - here's a tip: If you don't work at ALL? You won't pay ANY taxes!

Yeah, but it doesn't change the fact that there is a threshold to which your taxable percentage will be raised. We all have a balance of how hard you work versus what you are compensated. If you are gonna be close to that threshold you may not take that extra weekend client and instead stay home with your family. It is more of a mental game then anything else. "Why am I gonna work that much harder beyond everyone else if I am taxed at a higher rate than everyone else for making more money?".

 

Also, if your Adjusted Gross Income exceeds a certain threshold you actually forgo a portion of your tax deductions. Which raises your tax burden.

[TD Ryan2 316]

I'm no fan of increased taxes or big government.

 

but this article is foolish.

they find a lawyer and a dentist on the cusp of the $250k mark and present it as the "norm" for the entire tax plan.

 

It's dumb because there will always be people on the cusp of any tax threshold. And those people will always try to squeak under the threshold even if that means earning less (or working less) to get under some magic number.

 

 

and, in some ways, this is like some dumbass claiming he doesn't want to hit the lottery because of all the taxes that will be taken out of him (if I win a million dollars, I'll have to pay 30 Grand!)

[KSB2424 3,174]

but this article is foolish.

they find a lawyer and a dentist on the cusp of the $250k mark and present it as the "norm" for the entire tax plan.

Yeah, the way they find people right on the 205k line and then portray that as the norm is bad journalism.

[itsbigmoni 1]

I'm no fan of increased taxes or big government.

 

but this article is foolish.

they find a lawyer and a dentist on the cusp of the $250k mark and present it as the "norm" for the entire tax plan.

 

It's dumb because there will always be people on the cusp of any tax threshold. And those people will always try to squeak under the threshold even if that means earning less (or working less) to get under some magic number.

and, in some ways, this is like some dumbass claiming he doesn't want to hit the lottery because of all the taxes that will be taken out of him (if I win a million dollars, I'll have to pay 30 Grand!)

 

Again, trying to get under a tax threshold is stupid. Only people who don't understand taxes will say/do things like that. Since most people making 250k will have an accountant, they will know there is no point in getting under a tax threshold. You will never earn less money by earning more. It is impossible. For every extra dollar you earn, you will always earn more.

 

KSB might have a point. It makes sense in a way, but how many people really think that way? I'd say very very few people.

[Uh-huh 0]

That article makes me glad I'm not an accountant. Thanks for clearing that up.

My pleasure.

[TD Ryan2 316]

Yeah, the way they find people right on the 205k line and then portray that as the norm is bad journalism.

 

that's my point.

they're pointing to these unique examples like, "this will be going on everywhere".

 

the people/small businesses who fit this exact profile are rare. The select few who happen to fall right on that particular income benchmark and can fairly easily maneuver themselves below it by hiring one less person or working a little less.

 

My observation here has nothing to do with political parties or political philosophy. It's about an article that written to fire up clay heads by taking such a small sample size and passing it off as "the norm".

[wiffleball 4,799]

Yeah, but it doesn't change the fact that there is a threshold to which your taxable percentage will be raised. We all have a balance of how hard you work versus what you are compensated. If you are gonna be close to that threshold you may not take that extra weekend client and instead stay home with your family. It is more of a mental game then anything else. "Why am I gonna work that much harder beyond everyone else if I am taxed at a higher rate than everyone else for making more money?".

 

Also, if your Adjusted Gross Income exceeds a certain threshold you actually forgo a portion of your tax deductions. Which raises your tax burden.

 

Virtually every tax plan we've ever had has had a threshold. This is nothing new. If I remember right, the top rates are actually lower than people paid under Clinton - and no one was biitching then. All that's happening (largely) is that Bush's tax cuts are being allowed to expire. That's the first time in history we've ever CUT taxes whilst pursuing two different wars. Undoing that isn't' a bad idea. If the idea of having a threshold where some people pay more on their top earnings bothers you, we've had that all along.

 

Seriously, we're talking what? 5% here? Work this out:

 

So, I have a chance to make $200K or $300K.

 

You're going to blow off the extra 100K gross - to save 5% on 50,000?

 

 

200K Gross = 144K net - You keep 72% of your gross.

 

300K Gross = 213,500 net - You keep 71% of your gross.

 

Note: Under Bush's plan, it would be 300K gross with a $216K net. You're going to blow off $100K in business for a measly 2,500? Jeesus.

 

This is simplified, but You gotta be kidding me.

 

 

 

This isn't anything new guys. If you're going to blow off $100K in work because you don't want to pay 5% extra on a portion of it? Wow. That's one stupid attorney in that article.

[LOD01 199]

"We are going to try to figure out how to make our income $249,999.00," she said.

 

But to focus keeping your income below a quarter million dollars is not going to have any spectacular magic for individual tax payers," said Schatsky. "The difference between $249,999 and $251,000 will probably have zero tax impact."

 

 

Proof that you can make a lot of money and still be one of the dumbest illogical rocks on the planet.

[LOD01 199]

Can't say I blame them.

 

 

So we should all do this? I mean, I am down in the married, under 100k group. I am pretty sure there are levels below ours. Should we drop down a level or 2 so we don't pay as much either? I mean they are taking my cash and giving to someone else so this 62 year old bag says.

 

See how stupid they sound.

[redtodd 7]

Hey, if they do a good enough job avoiding taxes, Obama might hired them to a cabinet position.

[wiffleball 4,799]

Hey, if they do a good enough job avoiding taxes, Obama might hired them to a cabinet position.

[BudBro 185]

or obama could make america a tax haven, encouraging people to bring their money to the states and invest it, thereby creating an economy instead of destroying one. stop voting for democrats.

[washers 0]

they're pointing to these unique examples like, "this will be going on everywhere".

isn't that called the nightly news

[Cdub100 3,996]

Wow, some people are focking retards. The tax bracket isn't the same rate for ALL of your income. For the first 50k, EVERYONE gets taxed the same.

 

For the stupid attorney, she'll have more income when she makes 251k compared to 249k. She'll only pay a higher tax rate on income after 250k, meaning, for the first 249k, she'll pay the same focking amount, and then on 250-251k she'll pay a higher rate. It is impossible to make a higher gross income but a lower net income because of taxes.

 

If taxes up to 250k are 30% and taxes on income are 50% she would still make more money if she made 251k.

 

0-250k- taxed at 30%

250-251k - taxed at 50%

 

See it? She would make an extra $500.

 

There is no focking way she doesn't know this. I can't believe abcnews reported on some ignorant sh1t like that. I also can't believe you guys, who are generally smart, didn't notice this.

 

This saved me a lot of typing. I used to have an argument with a guy I work with. He said he wouldn't work OT because he was right on the cusp of the tax breaket and would LOSE money.

 

I bet if Obama went on national TV and tried to explain our progressive tax system people would think he's trying to change the IRS code.

[Uh-huh 0]

This saved me a lot of typing. I used to have an argument with a guy I work with. He said he wouldn't work OT because he was right on the cusp of the tax breaket and would LOSE money.

 

I bet if Obama went on national TV and tried to explain our progressive tax system people would think he's trying to change the IRS code.

That guy is the demographic the GOP aims for -- people who don't understand or won't accept the concept of progressive taxation, or even basic economics.

 

You just have to feed him soundbites about "socialism" and "wealth redistribution" and "raising taxes" and he's ready to take to the streets.

[wiffleball 4,799]

That guy is the demographic the GOP aims for -- people who don't understand or won't accept the concept of progressive taxation, or even basic economics.

 

You just have to feed him soundbites about "socialism" and "wealth redistribution" and "raising taxes" and he's ready to take to the streets.

 

Yup. This is why the GOP is courting the stupid.