04 March, 2009

Time to Start a Tax-Consulting Business

Via Steve Benen, Jon Chait and his commenter have a bonza idea for playing Robin Hood in today's economy:

My post about ignorant rich people who think they can have a higher after-tax income by holding their earnings under $250,000 a year brought on a follow-up from National Review's Stephen Spruiell:

But these taxpayers have other reasons to be worried. Obama has proposed increasing the tax rate on capital gains and dividends from 15 to 20 percent for those taxpayers earning over $250,000 (married) and $200,000 (single). If that's implemented without any kind of phase-in, then going from $249,999 to $250,000 incurs a pretty big tax penalty, right?

Maybe I'm wrong about this (if I am, I'm sure Chait will let me know).

Jesus Christ, yes, you're wrong. Taxes on capital gains income and dividends work the same as taxes on ordinary income. When you move int a higher bracket, only the income above that level is taxes at the higher rate. So, the lowest ordinary income tax rate is 10%. Everybody, including Bill Gates, pays some of their income tax at the 10% rate. Nobody pays their highest tax rate on all their income.


Commenter "ratnerstar" has the right idea here: It's time to stop educating these ignorant rich people and start taking advantage of them. We have some number of high-income people out there who earnestly think they can increase their take-home pay by decreasing their salaries.This is one of the great scamming opportunities of all time, with the side bonus that the targets richly deserve their fate.

We should start a franchise. We'll need a name. H&R Bilk? Jackson Hornswaggle?

No, we don't have to be subtle. Are you kidding? People this ignorant about the tax laws will be so eager to avoid paying a few extra pennies on the dollar that the meaning of the name will escape them entirely.


flameraven said...

I am amazed at the names of things sometimes. We got one of those 'donate to give children Bibles in China!' papers awhile back, and the real kicker? The guy supposedly 'sponsoring' the effort was named Charles L. Swindoll. WTF. Even if that's your real name, make up something that sounds less like 'swindle', plzkthx.

Efrique said...

Okay, no wonder the Cons have such a ready audience among the wealthy if they don't even understand how tax actually works.

Efrique said...

I can't believe that the first time I read this, I didn't spot the Australian slang.

John Pieret said...

Dewey, Cheathem & Howe, Tax Consultants to People Too Rich to Know Any Better