The New 50% Tax Bracket

[BobKamman]

It looks like the Senate will amend the next round of Covid relief legislation so that EIP#3 will be phased out for incomes between $75K and $80K ($150K and $160K for MFJ) instead of a cap of $100K/$200K.

This means that someone with AGI of $75K will receive $1,400, but another $5K income will reduce that to zero. That amounts to a 28% tax rate on the extra $5K. They’re probably already in a 22% tax bracket, so the effective rate is 50%.

Anyone else remember the days of “maximum tax on earned income,” of 50%?

I'm not sure how this would work for someone with two dependents, who would receive $4,200 with an AGI of $75K and is not eligible for Head of Household (which has a higher allowance).  If the payment for dependents is capped at $80K also, they would be in a 106% bracket.  

[Just-Lisa-Now-]

thats a short phase out window, people arent going to be happy. $5 reduction on every $100 over the lower amount, wasn't too hard of a sell, but this doesnt leave much wiggle room.

[qbteachmt]

"I'm not sure how this would work for someone with two dependents, who would receive $4,200 with an AGI of $75K"

You mean how the current math is used?

"For individuals with qualifying children, these total-phaseout amounts increase by $10,000 for each qualifying child. For example, for an eligible individual filing as married filing separately with 3 qualifying children, the individual’s payment is reduced to $0 if his or her AGI is $129,000 or more."

That's up from $99k.

[BobKamman]

Not the way it works under the House bill.  And the Senate apparently would change the last line of this from $25,000 to $5,000.  

(d) LIMITATION BASED ON ADJUSTED GROSS INCOME.—
(1) IN GENERAL.—The amount of the credit allowed by subsection (a) (determined without regard to this subsection and subsection (f)) shall be reduced (but not below zero) by the amount which bears the same ratio to such credit (as so determined) as—
(A) the excess of—
(i) the taxpayer’s adjusted gross income for such taxable year, over
(ii) $75,000, bears to
(B) $25,000.

[IRonMaN]

If it is a stimulus payment to help the economy, then send the check to everybody.

If it is a COVID relief payment, is a couple making $160,000 "struggling" less than someone making $150,000?

They still seem to just want to through money out the window and see if anybody can catch it rather than aiming the money at folks that really have been affected by COVID.

[qbteachmt]

"then send the check to everybody."

I still have Yang's $1000 bill on my fridge. It's wonderful.

[BobKamman]

The problem is that the States are not United in cost of living.  A couple can get by quite nicely (except for the lack of running water, the last couple weeks) on $160K in Jackson, Mississippi.  Not so much, in the Jackson Heights neighborhood of New York.  Still, the first two EIP laws were enacted with solid bipartisan support, so we get the government we pay for.  

The federal Migratory Bird Treaty Act of 1918 accords to roadrunners, as it does to Cooper's hawks, cardinals, robins, pelicans and almost all other native North American birds, full protection from intentional killing. It is illegal to kill roadrunners.

[IRonMaN]

I don't kill them, I just cook them.  Well, I'm planning on cooking them but nobody has taken me up the offer yet.

[sjrcpa]

Guess that was not enforced during the Great Depression. I read that the bird population declined significantly in this country during those years because they were killed for food.

Fast forward- the other day someone posted a picture of a dead bald eagle that was apparently hit by a car in my neck of the woods. Then the carcass disappeared. There is now an investigation because it was illegal to remove the carcass.

[IRonMaN]

Yeah, you can't even keep a souvenir feather or two.