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Obama's 'Tax the Wealthy' Policy
Obama’s camp has released some information on the tax policies he plans to implement should he be elected as president. Broken down into four categories, they explain the changes and what it could mean to the public.
He plans to change the top two tax brackets back to their pre-2001 levels of 36% and 39.6%; a raise from the current 33% and 35%. There would also be some limitations on the amount of a deduction or personal exemption high-income taxpayers may take.
However, these changes may not affect all people within these two brackets. It will depend on whether they’ve been subjected to the Alternative Minimum Tax (AMT) in the past. The way this works is that they are supposed to calculate their income tax under the regular bill and the AMT. If their bill under the AMT is bigger, then they have to pay that. However, these changes only decrease the spread between the regular bill and the AMT bill. Either way, if the AMT bill is bigger, they would still pay that. So it’s not really affecting them until the AMT falls well below the regular tax bill, which isn’t expected.
The current cap on payroll that can be taxed to fund social security is $102,000. Anything over that amount doesn’t get taxed. However, under Obama’s plan, anything over $250,000 would be taxed. The amount between $102,000 and $250,000 would still be protected.
This will clearly help fund social security and make it stronger. As of now, most Americans are paying the tax on 100% of their income because they make less than $102,000. Those over that bracket are only paying on a portion of their income. So, someone making $204,000 is only paying tax on 50% of their income. Obama’s policy is meant to spread the tax out among the income levels.
Some changes will also be made to investment income tax and estate tax, which do not affect the majority of the population. There are some details still being worked out, but these changes could have major affects to the wealthy.
Do you agree or disagree with Obama’s plan? Why or why not?