White House Flunks TAX Math

White House Flunks TAX Math -

 I get it Mr. President!  So you want me to work a little harder to earn an additional $1,000 and pay marginal (not average) rate of 38%.

Then, I  wanting to save for retirement, invest the $620 left after taxes.  I earn 5% on my investment, so I earn $31 dollars in dividends. Right now, there's a 15% tax of dividend income, i would pay $31x15% = $4.65 in taxes. Since I already paid tax on my savings, this raises the tax rate on my $1000 EARNED income to 38.46%

Now, Mr. President, you  want me to pay the same 38% tax rate on my dividend income. So now my tax on my dividends is $11.78 ($31x 38% = 11.78).

My tax rate on the $1000 EARNED income - the original source of the savings that i invested to earn UNEARNED INCOME now rises to 39.17%

I think a 39.17% marginal rate on dividends is higher than the rate paid by Mr. Buffet's secretary.

So how will this "millionaires Tax" help the Economy ?  It won't !

From Econ. 101 we know that Savings=Investment. Raising the tax rate on savings will reduce the pool of funds for investment. And, we know that permanent job creation in the PRIVATE SECTOR flows from investment, (including R&D) The PRESIDENT's tax plan will reduce the likelihood of Private Sector joib growth

So the President wants to pay foir his Job Creation program with an tax plan that ill choke off the oxygen supply to job creation .. Makes sense to me... How bout to You ?

cmr

9.28.2001