Tag Archives: Tax Foundation

By TF Staff

New taxes to fund the federal government’s plan for higher health insurance spending continue to be debated in Washington. According to a new Bloomberg report, the top surtax rate will be 5.4 percent in the House plan. That will be the top rate in a three-tiered surtax aimed at high-income tax returns:

1 percent surtax on AGI between $350,000 and $500,000 (singles between $280,000 and $400,000)

1.5 percent surtax on AGI between $500,000 and $1,000,000 (singles between $400,000 and $800,000)

5.4 percent surtax on AGI beyond $1,000,000 (singles beyond $800,000)

States have been raising taxes on this same group, leading to concern over how high the combined tax rates would be in each state, especially in the growing number of states with double-digit tax rates. Some commentators merely sum the rates at the federal, state and local level to give a statutory total tax rate. A more accurate method is to calculate the effective marginal tax rate, which takes into consideration deductions and adjustments. For a description of the difference between effective marginal tax rates and effective average tax rates, see Average vs. Marginal Tax Rates Revisited.

In Table 1 below we present calculations of the effective marginal tax rate on top earners. We use assume that the 2008 weighted local average for each state applies to 2011, the top federal taxable income rate will rise as scheduled to 39.6 percent, the top state tax rate in each state will follow current 2011 scheduled law, and a new House plan for 5.4 percent surtax on AGI earned at very high-income levels will become law.

Table 1 (Ohio)

Top Effective Marginal Rates under Proposed Health Care Surtax by State

Sorted by Combined Top Tax Rate in 2011

To see rankings of other states, go to the Tax Foundation website.

Commentary

Taxing the rich to pay for free health care is an ploy of the rich and powerful to rob the non-rich of both their freedom and their income. Anyone familiar with Roman history will recognized the strategy. The Roman imperialists tax the nations of the world to pay for their big agendas. Caesar and the Roman Senate taxed the wealthy elites of the respective states. In turn, leaders like Herod increased local taxes on productive peasants. In order to pay, many had to borrow money. When misfortune rendered them unable to pay it back, their land was confiscated. Most were allowed to continue farming the same land as long as they gave Rome via Herod or some other member of the rich elite the required amount, usually over 50 percent.

What this means under the Democrats’ taxing scheme is this: we peasants will end up paying for the huge tax increases of the rich in inflationary costs for products and services. In fact, I recently listened to what Canadians and British people have experienced under universal health care. They have had to endure long waiting lists for care and large increases in overall cost for their health care.

In every respect, universal health care is much more costly than market based care. The highest price for socialist medicine is dying while waiting to receive the promised health care.

One woman with brain cancer was able to come to the Mayo Clinic in America to get the necessary cancer treatment. That is she is suing her government. Had she waited she certainly would have died.

Americans who love the right to life as well as true liberty does not need Democrats’ impoverishing programs or their deadly health care.