Small business owner: I’m not alone in making this decision.
By Daniel at 2 February, 2010, 1:21 am
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We need to start looking at taxes in their totality, not incrementally. Below is an estimate of the total marginal tax burden of a high income wage earner under the new tax set-up currently being proposed:
Fed Income tax: 41-42%
Impact of capping
deductions at 28% 2-3%
Pelosi wealth tax 5% (think she’s going to let that die?)
Medicare tax 2-3% (no cap anymore)
State Tax 8-9% (I live in NYS, not the city, thankfully not in Oregon)
Total about 60%
Sales Tax applied to everything
I buy with remaining 40% 3-4% (8+% of remaining 40%)
I’m not even including property taxes, school taxes, gasoline taxes, “sin” taxes, telephone, cable…. since one could argue they are not marginal to higher income (although of course we’d be likely to spend more on them if we had extra income). Nor am I including the impact of higher cap gains and dividend taxes.
Total marginal tax rate = about 2/3 of marginal income.
I’m a small business person with 2 small children. I have a skill that has value in the marketplace, but like most it requires a lot of hard work to grow my business. So I can choose to keep my income more moderate, not hire people, not bring outside money into my local economy, but spend a lot more time with my children. Or I can work my rear-end off, hire people, grow my business, but spend many, many days and nights away from home. With low taxes, it would be a difficult decision. Only getting to keep 1/3 of the extra money from all that work, it’s a no-brainer.
I suspect I’m not alone in making that choice.
- Frank Seldin
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