Michael Moore’s preferred 95.6 % Income Tax Rate

  I saw Michael Moore on Hannity the other night and maybe some of you did as well, but I decided to put his (Moore’s) demeaning comments to Hannity down on paper mathematically.  If you watched the show you know that he was talking down his nose to Hannity all night suggesting that he didn’t care about the “poor” at all.  When Hannity asked Moore to define what his tax plan would be he said the following below.  Please bear with me as I transcribe his comments into real values.  Also my assumptions are not assumptions at all, but based on “taxing the rich” as Moore prefers.

 

Since we are talking about the rich and both Hannity and Moore could be described as “rich” with each making income in the million’s I am going to make this analysis based on the Maximum tax bracket in both the Federal and State model and I am going to ignore the slight impact of the lower brackets since it is insignificant within the class of the rich.  I am also going to “assume” for the purposes of this analysis that the “rich” in question here are “self employed” people since most of them are such as Moore himself, Hollywood Stars, Rock Stars, etc.  These are the rates effective for 2009.  

 

Mr. Moore said that both he and Hannity could afford to have their tax rate “doubled” and that this should happen and would be disappointed if Obama didn’t do this.  Although Hannity took him to mean doubling ALL their tax rates I believe that there was a disconnect between Hannity and Moore on this point.  I am going to assume the conservative approach and say that Moore was only referring to the Federal Income Tax Rate (if I am wrong and he is suggesting what Hannity thought he heard, watch out, that is a combined tax burden exceeding 100% of income).  Since the maximum Federal Tax Rate (effective on income above $372,200 for Married Filing Joint) is 35% Moore’s “doubling” of the Federal Tax Rate would bring his practical “Federal” tax rate to 70%.  He went on to state that it was a scandal that “high earners” paid Social Security Retirement tax only on the first $106,800 of earnings with the rest being untaxed.  He thought that this was an abuse of the lower earners and a shame on the higher.  (He didn’t mention that through the IRS taxation of Social Security Earnings that by far that most of the Social Security payments are made to the lower income earners.)  So adding this tax to not only the first dollar but the last dollar of earnings as well brings this component of tax up to 15.3% on all income.

 

In addition to this we can assume (though Moore didn’t state) that the State Income Tax is still part of the “overall” tax package as it affects the tax payer.  States vary in such rates, but since most of the noise on the matter is coming from California, I’ll use their tax rate as the example in this model.  That “maximum” tax bracket is 10.3%.

 

Adding this all up you will get a combined 95.6 % (70.0 % Federal Income Tax, 15.3 % Combined Social Security & Medicare Tax, and 10.3 % State Income Tax-CA).  

 

This 95.6% is simply those taxes based on income and do not recognize Real Estate nor Sales Tax.  (Of Course in addition to “income taxes” the Democrats through the voice of Nancy Pelosi are now considering a “National Sales Tax” (VAT) on top of it all.

 

So, lets take a great income of $10,000,000 for these “filthy rich” celebrities, stars, Entrepreneurs, business owners, etc.  So here you have a Gross Income is $10 million and after deducting the taxes that Michael Moore and his ilk have in store for you, your “take home pay” (i.e. after tax income) is $440,000 and you may say “gee that is a good income and so right you may be, but this the amount before further reduction due to sales taxes and Real Estate taxes on those expensive houses, and with that you will probably be in the S300’s take home range.  If you are not so talented and only making $5 million per year you can count on a take home pay before sales and real estate taxes more in the low $200,000 range and this is before putting anything aside for Retirement or children’s education (assuming we ignore the VAT tax on top of this all being considered by the Democrats right now).  I have to believe that the Jet Fuel for this class of liberal is more than $200,000 per year alone.

None of this analysis begins to approach the element of “risk” that the “rich” must confront in order to develop a business that will earn them a profit of $10 million, $5million or even less.  When you take this into consideration you have a situation where nobody would take the risk to develop the jobs that the country needs.  At the 10 million level of pre tax profit you might have a Gross business of $100,000,000 with a 10% pre-tax profit (which would be great) and if you were fortunate enough to obtain a rate of return on your invested capital of the lofty number of 20% this would mean that you had “at risk” capital of $50,000,000 to fund this type of operation.  In short you are risking $50 million with the hopes in a good year of making maybe $300,000 take home pay.  Not me……..and I doubt you would either.  I’ll just keep the $50 million risk free and you can look for your jobs elswhere.

Now this is change you can not only believe in, but that you are going to get………………….

October 10, 2009 | Filed Under Administration, American Left, Economics, Taxes, The Left | 3 Comments