Friday, April 15, 2011

The Perversity of the Bush Tax Cuts

Under current tax law, a married couple with no chidren could receive $86,700 in dividend income in a year, and if it was their only income, they would owe no federal taxes.  If they received $250,000 in dividend income as their only income, they would owe $24,495 in federal taxes, without itemized deductions.

If the same couple was self-employed and earned $86,700 in earnings in a year, they would owe $20,694, including FICA.  If they earned $250,000, they would owe $72,277.

That doesn't make sense to me, does it make sense to you?

Update: Paul Ryan's Roadmap for America's Future released in 2010 would eliminate all income taxes on interest income, dividend income and capital gains income.  Guess who would benefit from that?

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