proselytism

[rone]

I am throwing my support behind Wesley Clark (not merely because of this, that is, but it's a good quote).

"If [Republican strategist] Karl Rove is watching today, Karl, I want you to hear me loud and clear: I am going to provide tax cuts to ease the burdens for 31 million American families -- and lift hundreds of thousands of children out of poverty -- by raising the taxes on 0.1 percent of families -- those who make more than $1,000,000 a year. You don't have to read my lips, I'm saying it," Clark said.

Comments

[mmcirvin.livejournal.com]

That's not how tax brackets work, at least not with federal taxes; unless I'm mistaken, when you pass a bracket threshold the higher rate applies only to income above the threshold, so that your take-home pay still increases monotonically, just at a lower rate. The discontinuity is in the first derivative, in other words.

That said, the tax code is not perfect and there are things in it that create perverse incentives. A good example is the Alternative Minimum Tax. This was a well-intentioned means of closing some loopholes that allowed millionaire CEOs to avoid paying most of their income tax by being compensated in creative ways. But an unintended side effect is to make it dangerous to hold onto stock obtained as a result of exercising employee stock options, because if the value goes down you can end up being taxed under the AMT on money you never actually had, something that can really wipe you out if you're not prepared for it. The result is that people almost always dump the stock immediately, and options no longer function as a means of encouraging employees to invest in their own companies, which is something the tax code generally tries to promote.