This Gift-Wrapped Tax Increases Comes With an Extra Bracket

By December 2, 2010Taxation

Here’s a strange and likely little noticed provision included in H.R. 4853, The Middle Class Tax Relief Act of 2010. The bill, sponsored by House Ways and Means Chairman Sander Levin (D-MI), permanently extends tax rates for those making under $250,000 – de facto raising taxes on those making over $250,000. But, it also goes one step further and creates a whole new tax bracket of 36 percent – increasing the number of brackets from six to seven. Why you ask?

Democrats have promised not to raise taxes on those making under $250,000, but the current bracket of 33 percent kicks in at $209,000. Yikes! What’s a politician to do? President Obama proposed a simple expansion of the 28 percent bracket, giving a tiny break to those who fell into the crack. But that was just a bit too generous for Chairman Levin. So, he created an entirely new 36 percent tax bracket for that narrow window of income.

So much for the Christmas spirit, eh?

The National Association of Manufacturers this morning sent a “Key Vote” letter to the House opposing the bill. That letter is here, and the NAM’s statement is here.

Leave a Reply