The current U.S. economy, growing slowly but still depressed, has led many localities to cut back on schools and public safety, two of the most basic functions of government. That’s bad not just for now but for the future.
The Obama administration proposes an extra half-percent tax rate that would apply only to the fraction of personal income over a million dollars per year, with the money used to hire back hundreds of thousands of police, firefighters, EMTs, and teachers.
Some news reports misleadingly describe this as “a half-percent tax on incomes over a million dollars” or something like that, which sounds as if you made one million and two dollars, your added tax would be $5000.01. In reality it would be just one cent.
This is the way income tax brackets work in general, though people often don’t realize it. No matter how much money you make, you pay the same 10% federal income on your first $8,350 of taxable income in a give year, then 15% on the next $25,600, and so on. (Of course, not all income is taxable, and there are tax credits as well that can reduce what you owe. In addition, a lot of investment income is taxed at a lower rate that tops out at just 15%.)
Polls consistently show that a majority of the public, including a majority of Republicans, in favor of a modest additional tax on the rich to pay for urgent needs and to help close the budget deficit. Even some Republican members of Congress say they’re in favor, but the they still vote against it in an effort to damage Obama politically.