There’s been a lot of hullabaloo about Obama’s proposed tax increase on people earning more than $250k. The fact of the matter, as Daniel Gross points out, is that the increase is on the money made above $250k, so that you get taxed at the higher rate only on (your income – $250k). Nevertheless, there has been some handwringing (reported on TV) from people who are near this magic threshold, saying they are going to try to earn less so they fall below $250k, which leads to thing like this:
That dentist eager to slash her income from $320,000 to $250,000 would avoid the pain of paying an extra $2,100 in federal taxes. But she’d also deprive herself of an additional $70,000 in income!
I was puzzling over why these people seem to have no idea of what the tax change means for them when I heard Jeremy Hobson (who went to Uni High with me!) on the radio this morning:
About 60 percent of Americans still go to a professional for their tax needs. That includes chains like H&R Block and Jackson Hewitt — and CPAs. The other 40 percent do their taxes manually — with the majority of those people heading online.
I’m betting the percentage of people making above $250k who don’t do their own taxes is even higher than 60%, which explains it all — those people don’t need to know how the tax system works. And so they all go running to Grover Norquist.