Comments on: What the 2011 Federal Marginal Tax Rates Could Look Like – Pure Speculation

By: Larry T

Larry T — Sat, 08 Aug 2009 02:19:56 +0000

Nice work. I heard at some point that they were considering having SocSec kick in again over the 250K level – meaning you pay as normal up to ~$107K, and then pay another 6.2% for everything over $250K. If you’re self employed, this REALLY does a number on you since you pay both sides….

Also, there is talk about completely phasing out certain deductions for incomes over 250K or possibly 350K, independent of the 28% limitation you mentioned.

Paying higher incremental rates is one thing, but limiting deductions that everyone else is allowed is totally another. I’m so tired of the “fair share” argument.

According to the IRS, in 2007, earners over $500K AGI contributed 37% of total tax revenue, the number grows to 55% when lowering the bar to include those over $200K – you can then estimate those over the magical 250K marker contributed roughly 40% of total revenue. This number will easily hit 50% after the changes, which means each person in the top 5% will be carrying the load of 9 other tax payers. Buyers remorse anyone?

http://www.irs.gov/pub/irs-soi/07in11si.xls

By: JohnB

JohnB — Fri, 17 Jul 2009 21:58:36 +0000

I think the 33% rate will remain for taxable incomes from $208,850 (before adjustment) to $250,000 — otherwise, those folks would get a tax cut according to your chart. The Dems don’t want that.

By: DAve

DAve — Thu, 16 Jul 2009 17:58:37 +0000

I believe the cuts expire after 2010 (meaning 2011). I suspect the surtax if ennacted (which is against modified AGI – not taxable income) kicks in for 2010 (haven’t checked the effective date). So you probably need to index it another year out to 2011 for your chart to be close to accurate. Of course with the surtax going against AGI it will not be reduced by itemized deduction (or standard) or exemptions – which are both subject to phaseouts which result in further bumps to the rate. All this w/o any consideration of AMT.

The 2011 rates are important if you are planning a Roth conversion when the income cap comes off in 2010. You have the option of deferring the income to 2011/12 (essentially an interest free loan), but the income will hit against the new tax rates.