Here’s how Obama’s tax war will play out: The corporate executive, the $2 million-a-year law partner, the successful small business owner — along with hedge-fund billionaires — will consult lawyers. They concoct a strategy to strip their taxable income to the lowest legal levels. They will make up for lost compensation in other ways — perks, deferred income, whatever. The rich are not stupid. They did not get rich by being suckers.
The $300,000 W-2 earner, on the other hand, will be in a world of hurt. There will be no place to hide. …
Suppose Obama sets the top income tax rate at 40%, starting at $200,000. Suppose he also blows away the roof on FICA taxes, currently 7.65% capped at $97,500 (if my figures are right). Thus, the $300,000 W-2 earner who lives in California or New York will see his last earned dollar taxed in 55% range.
This will be before property and sales tax.
Today's $100,000 to $150,000 W-2 earners, who might be snickering at the fate of their $300,000 W-2 peers, will themselves be pushed into Obama’s $200,000 killing zone in a few years. That's what inflation will do.
The editor’s opinion from Marketplace, Northeast Wisconsin’s business magazine. (Obligatory disclaimer: Most hyperlinks go to outside sites, and we’re not responsible for their content. And like fresh watermelon, peaches, pineapple, grapefruit, tomatoes and sweet corn, hyperlinks can go bad after a while.)