Archive for October 20th, 2008

So I’ve been hearing from Sen. Barack Obama that it’s “patriotic” to pay taxes. He also informed Joe the Plumber that it’s best to “spread the wealth.” The implication is that we’re not already doing that these days. It makes me curious what tax rate the man who might be our next president thinks would be most just.

I’m asking because governments of all levels already take the majority of my income. Indeed, even though I earn about six figures a year, the only reason I can afford to work is that my husband earns more than I do.

How is this possible? Here’s the breakdown for this New York City independent contractor. My federal income tax rate is 35% — calculated from the first dollar since as part of a married couple, I get taxed at my husband’s rate. My Social Security and Medicare taxes come out to 15.3% since, as a self-employed individual, I pay both the employer and the employee part. Already, this puts me up past 50%. Then you have to add in New York State and city income taxes (including a little gem called the “unincorporated business tax” which taxes self-employed income twice in NYC).

The result is that governments take over 60% of every dollar I earn. But the Obama-Biden ticket thinks this is not nearly patriotic enough.  They want to add in at least another 4.6 percentage points to bring my federal income tax rate to 39.6%. This pushes me up to roughly a 65% tax bracket.

Now I can see the objection: if I’m lucky enough to be married to a man making over $350,000 per year (roughly the line for the current 35% tax bracket), what do I have to complain about? But marginal tax rates are all about incentives. Why should I work if I only get to keep 35 cents on every dollar I make? At some point, it stops making sense for me to even try to earn money. In essence, the tax code Obama envisions as just will try to do a little more to push me out of the workforce.

This has been an election of oddities. I used to think Republicans were out to get working moms, until the entire conservative wing of the party developed a crush on Gov. Sarah Palin. I thought Democrats were the champions of the working mom — but their tax plan will make it even more pointless for me to try to earn a living once you factor in the cost of daycare. Of course, if I don’t work, that’s $60,000 less in wealth that governments will have to spread around. But hey, why let that pesky little detail get in the way of our zeal to have everyone pay their “fair share?”