Sunday, November 16, 2008

Options

Obama has pledged to raise tax rates back to 2000 levels, ie kill the Bush tax cuts. This means for 2009 and going forward, the marginal tax rates will look as follows:

$0 to $26,250 15%
$26,251 to $63,550 25%
$63,551 to $132,600 31%
(this is where you start becoming rich according to Obama)
$132,601 to $288,350 36%
Over $288,351 39.6%

Obama will also lift the Social Security ceiling, meaning everyone will pay a 12.4% flat tax on all income. And of course the already existing 2.7% Medicare tax.

Here is Canada's tax structure:

$0 to $37,885 15%
$37,886 to $75,769 22%
$76770 to $123,184) 26%
Over $123,184 29%

The Canadian version of Social Security tax is 4.95% flat on only the first $46,000 income. There is no Medicare tax equivalent.

Earn $100K in the US, you pay $25,681 federal, $12,400 Social Security, $2700 Medicare, grand total $40,781

Earn $100K in Canada, you pay $20,276 federal, $2,227 Social Security for a total of
$22,503.

$18K worth of hope and change extra. See you all in British Columbia.

4 comments:

Scott said...

Look I am no defender of Obama, but you have the whole social security tax thing WRONG and you've said it about half a dozen times, so...

It's not going to be uncapped, nor will it tax you from the current limit up to $250K. Above $250K it will be 2-4% extra (employer and employee amounts)... Does this suck? Yes, but is it what you say it is? Not even close.

Obama does not support uncapping the full payroll tax of 12.4 percent rate. Instead, he and Joe Biden are considering plans that would ask those making over $250,000 to pay in the range of 2 to 4 percent more in total (combined employer and employee).

http://www.barackobama.com/issues/seniors/

Ed said...

Scott you can't possibly think Obama will not lift the cap fully for everyone. Unless we are now in a new paradigm where just because Obama says something it shall be so. Don't tell me you also think you'll also get a tax cut since you make under $250K a year.

Truth of the matter is one two things will happen with SS. Taxes will have to go up by insane amounts or benefits will have to be cut by insane amounts. Adding 2% extra for 1% of the population won't do more than keep the ponzi scheme alive a few months.

So the choice is do you lift the cap on "rich" people making more than $100K a year that don't vote for you anyway and so doesn't matter if you piss them off? Or do you cut benefits for old poor people who vote for you and you want them to keep voting for you?

Answer that and you will answer the question of will the cap be lifted fully.

Aric said...

Also, @scott, he won't "ask" those making over $250k to pay more. He'll *tell* them to.

Ed said...

Even if he doesn't take away the SS cap, at $100K, which was my example, taxes will still be significantly higher in the USA compared to Canada.