Thursday, October 22, 2009

Tax Rates will have to TRIPLE to close deficit

Good Luck with that.

Link

Assuming deductions, exemptions and credits were kept the same as they are now, the government would have to nearly triple every tax rate. Table 1 shows the effect on statutory rates of such a hypothetical tax hike. Instead of taxing couples with rates that range from 10 percent to 35 percent, tax rates would have to start at 27.2 percent and range up to 95.2 percent.

Table 1
Federal Individual Income Tax Rates for Joint Tax Returns

Current Law Versus Rates Necessary to Erase Deficit
2010

Tax Brackets for
Couples Filing Joint Returns

Current Law
Tax Rates

Rates Needed
to Close Deficit

0 to $16,750

10%

27.2%

$16,751 to $68,000

15%

40.8%

$68,001 to $137,300

25%

68.0%

$137,301 to $209,200

28%

76.2%

$209,201 to $373,600

33%

89.8%

$373,601 and over

35%

95.2%

Note: The rates are the same for single taxpayers, but the brackets vary. For
the bottom three brackets, the threshold amounts are exactly one-half what
they are for couples. For the top bracket, the threshold is the same for singles
as for couples. Brackets are shown for 2009; inflation adjustment for 2010 will
be announced in the summer of 2010.

Source: IRS and Tax Foundation