My hunch is that at current tax levels, a higher tax on earned income, and perhaps dividends would increase the tax take but by much less than the percentage increase in the tax rates.
When we first read the fairly short section covering the Medicare surtax on unearned income, we found it to be pretty straightforward and assumed all unearned income, loss and expense would be summarized and taxed just like the self-employment tax on earned income is summarized and taxed, now.
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Their central estimate is that the taxable income elasticity for this group is 0.46, which implies a revenue-maximizing tax rate on earned income of 56%.29 This in turn (accounting for NICs and indirect taxes) corresponds to an income tax rate of 40%.
This was set at 18% in 2007, far below a top tax rate on earned income of 43%.
Reducing taxes on additional income earned should increase income and the tax on that income to some extent.
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Still on the books: the enormous penalties that the earned income tax credit (EITC) levies on low-income couples with children and the penalties that occur when tax benefits phase out over income ranges for couples that are less than twice those for single taxpayers.
But we would ensure for once that the very richest among us pay at least some income tax on the economic income they have earned and can spend.
That makes S-Corp elections a wise choice for management companies focused on reducing SE tax on underlying advisory fee earned income.
In 1998, when I was Deputy Assistant Secretary for Tax Analysis at the Treasury Department, I asked my staff expert on the Earned Income Tax Credit (EITC) how many people the EITC had lifted out of poverty.
It gave top-tier earning expatriates the ability to avoid the standard progressive income tax of up to 43% and instead pay a flat tax rate of 24% on income earned in-country.
Should corporations pay American tax on income that really was earned abroad?
It would require multinationals to pay tax on foreign income as it is earned, ending the practice known as deferral where overseas income is not taxed until it is brought home.
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Mitt Romney wants to expand the tax deferral for overseas operations by adopting a territorial tax system, under which U.S tax would never be imposed on income earned by Foreign Co. from non-U.S. sources.
At the margin, a tax on earning additional income will reduce the total income earned and will reduce the tax take to some extent.
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The measure would double tax U.S.-based multinationals on income earned abroad.
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While the top personal income tax rate in California is now 10.55%, even the average income earner pays a marginal income tax rate on the next dollar earned of 9.3%.
On her 2007 tax return, Rogers excluded 100% of her United wages on Form 2555- EZ, Foreign Earned Income Exclusion.
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The U.K. Treasury has argued that athletes earn their sponsorship money through public appearances, but the system is significantly harsher than other jurisdictions around the world, where tax on foreign athletes is based on the number of days spent in country, or on the incremental income earned.
And his advisers are keen on bringing America's earned-income tax credit to Britain, replacing in-work welfare benefits with tax breaks.
Are they agitating for governments to impose worldwide taxation so that companies are double-taxed on any income earned (and already subject to tax) in other jurisdictions?
Most states tax residents on their world wide incomes and non-residents on income earned in that state.
In the 70s and 80s, U.S. federal marginal tax rates were as high as 70% (but only 50% on earned income), and that did not diminish my striving.
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Interest earned on state and local bonds that is exempt from income tax under Section 103 is excluded from the definition of net investment income for purposes of Section 1411.
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New York could tax them on the money they earned in New York, but not on their world wide income.
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We'll make sure that companies can't avoid paying tax on income they earn in the U.S. by pretending that they earned it in an overseas tax haven instead.
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NICs are paid only on earned income, not on money from savings, raising the same money from tax would place a lower burden on workers.
An even greater number of those with high expanded income escaped paying any tax, largely because of the exclusion from tax of interest earned on municipal bonds.
Costa Rica's government has sent bills to congress that would tax money earned abroad, levy the sales tax on services as well as goods, and introduce a single form for income tax.
It also wants an expanded Earned Income Tax Credit, an expanded saver's credit and a permanent exclusion from capital gains taxes on small business investment. (Does anyone think green energy tax credits will vanish anytime soon?) One ghost that keeps returning: the research credit, first introduced in 1981, which allows companies to write off a portion of their research and development expenses.
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