Thanks to Dan Evans, published on Liemberg Info Services, we provide the following:
For the wealthiest Americans, allowing the Bush tax cuts to “sunset” will be quite a shock.
A family of four with $500,000 of income filing a joint return with no itemized deductions would pay $136,208 in federal income tax in 2011 if the tax cuts continue to apply and there is no inflation for 2010.
· The same family will have to pay $158,801 in 2011, a $22,607 increase, if Congress does not act and the tax cuts expire.
If that $500,000 of income includes qualified dividend income, which is taxed at the capital gain rate of 15% instead of the maximum rate of 35% on ordinary income, the results are even more dramatic.
· In 2010, $500,000 of income with $250,000 of qualified dividends would result in $89,201 of federal tax.
· In 2011 the tax jumps up to $158,801, an increase of $69,600, or almost 80%, in only one year.
For a family of four with $250,000 of income, their tax bill is $51,701 under current law.
· That same family will pay tax of $59,341 in 2011, a $7,640 increase.
Reducing the family’s income reduces the impact, but the impact is still there.
· For a family earning $50,000, the tax bill would be $2,763 under current law.
· The bill jumps to $3,878, more than $1,000 more, in 2011.
Even a family earning as little as $30,000 would be affected.
· That family would owe $400 in federal income tax in 2010.
· But if the 10% tax bracket and marriage penalty relief both expire, that family’s tax bill more than doubles, going from $400 to $878.
The Will Doctor notes the following: consensus now favors inaction by Congress on this well into 2011, and possibly thereafter-so the examples above are worth considering