Quote:
Originally Posted by Poppinjay
Taxes are at 36%? OMG! Let's put all our money in a bank in Iberia! Taxes are down to 24%? Hey, let's put all our money into a bank account in town!
Don't see that happening. Smart money managers will always try their darndest to create tax-free income, even if the tax rate was 1%.
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First you have to look at real marginal tax rates, which for some will be pretty close to 50% on a federal level and possibly another 10% or more on a state level. Then understand that the amount of effort put into legally avoiding taxes or earning additional income that makes the net (after taxes) not worth the extra effort or risk, will rise as the real marginal rates rise. So, if the real marginal rate is 90% you will get a very different amount of effort than you would if the rate is 1%.
Second, look at the marginal tax rates the "poor" will face as they lose credits and deductions as their income rises. In some cases those marginal rates will be higher than the top rates on the "rich", I think that is wrong.