Middle class tax rate set to rise to nearly 50% in January 2013

From the Heritage Foundation’s Foundry blog.


A middle-class taxpayer’s income is subject to a 25 percent federal income tax. Then there is the federal Social Security and Medicare payroll tax of 13.3 percent in 2012—5.65 percent of that is removed from the employee’s paycheck, and the remaining 7.65 percent is paid by the employer. (In reality, the employee pays the entire 13.3 percent, because the employer’s portion of the tax does not affect the cost of labor: The employer would pay the employee 7.65 percent more if there were no employer’s portion of the payroll tax.)

So the 25 percent federal income tax plus 13.3 Social Security and Medicare payroll taxes equals 38.3 percent going to federal taxes in 2012.

And then there are state taxes. According to the Tax Foundation, the average state’s income tax rate for the middle-class taxpayer is 4.82 percent, which brings the total to 43.12 percent in federal and state taxes. And it’s going higher, thanks to the nearly $500 billion in tax increases for 2013 that some have called Taxmageddon. In January of next year, the federal income tax rate for middle-class taxpayers is scheduled to rise from 25 percent to 28 percent, and the payroll tax is scheduled to rise from 13.3 percent to 15.3 percent. This drives the marginal tax rate based on the aforementioned three taxes to 48.12 percent. Add in state and local property, corporate, excise, and other state and local taxes, and the percentage of each additional dollar that is taxed hovers around 50 percent.

When half of each additional dollar earned is taxed away, taxpayers experience a disincentive to start businesses or expand existing ones. This leads to fewer jobs being created.

It is outrageous that any dollar earned by a middle-class taxpayer would go as much to taxes as to supporting the taxpayer’s family. The government didn’t earn the taxpayer’s paycheck and shouldn’t be entitled to it.

People like me really do think about things like this – about getting up and going to work every day to earn half of what I am worth. Of giving up half my salary so that the Georgetown University student can have free contraception paid for by me. I am one of those people who pays about 45% of my income (federal, state and local) in taxes. If I had more of my own money, I could be following my own dreams – maybe to do a Ph.D and teach, or start a business, or become a minister. But those things can’t happen, because people keep voting for more and more benefits for themselves on my back – so that they don’t have to be burdened to make the decisions that it takes to take care of themselves and their families.

That’s what being a Democrat means – it means persisting in perpetual adolescence at the expense of people like me. It means taking away my dreams so that they can have my standard of living without having to work or play by the rules. Being a Democrat means piling up trillions of dollars of debt onto people who haven’t even been born – so that feminists can have free contraceptives. That’s what a Democrat is.

5 thoughts on “Middle class tax rate set to rise to nearly 50% in January 2013”

  1. The above logic is part of why I quit being a surgeon, paying by my calculations a personal marginal tax rate of around 68%, not to mention the stress of emergency call, the fears and cost of malpractice coverage, and an increasing lack of appreciation by entitlement-minded patients.
    Now I teach at 1 tenth the gross income, but nearly half the take-home income, with far less stress.

    I term it, “going Galt”, and like the problems of a certain historical Gadarene, “we are legion”.

    Next step? Figuring out how to survive pension confiscation once Social Security goes belly-up (You just know they’re gonna confiscate the private pensions, while O Holy Government looks out for all us rubes.)

    1. I know exactly what you’re talking about. Doctors are totally screwed in this country. You go to school for 10 years and then come out and they tax and regulate you to death.

      You’re right about the greedy left and private pensions, too. Argentina already nationalized retirement plans, and anything that the left does in one country can happen here. Obama thinks that people who save their money “didn’t build that” and I fully expect him to confiscate 401Ks and IRAs if he can and put everyone on Social Security. He likes the spread the wealth around, and you didn’t earn whatever wealth you have.


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