James Taranto ran the numbers on the 90% tax on bonuses at companies that took TARP money, and found that it isn’t exactly 90%. While that 90% rate replaces the federal income and federal alternate income tax rates, it does not replace the Medicare FICA tax of 1.45% on employee pay, which thanks to the Clinton administration applies to all income and is not capped. It also does not replace any state or local income taxes. James used New York City as an example – New York State taxes income at 6.85% and New York City taxes income at 3.648 percent. Let’s do some math:
90.000% – Bill of Attainder/Ex Post Facto federal punishment tax
+ 1.450% – Medicare FICA tax (paid by the employee)
+ 6.850% – New York State income tax
+ 3.648% – New York City income tax
————————————————————————–
101.948% – total tax paid by the employee
+ 1.450% – Medicare FICA tax (paid by the employer)
————————————————————————–
103.498% – Grand total tax paid by both the employee and employer
Thanks a lot, Paul Ryan. Thanks a lot, Nancy Pelosi. Thanks a lot, Charlie Rangel (BTW, has Rangel paid all of his back taxes yet?).
Before I go, there’s another tidbit in that piece. While companies would be able to avoid this if they got out of TARP, the regulators are trying to keep them in. Gee, I wonder why.
I think you’ve computed the tax rate desired by all of Washington. Write it up and send it to Rangel. You’ll be on his paid staff in a heart beat.
Thanks for a great post.
Jeff Smith, Founder
Generation BIG,Bold, Innovative and Generous
http://www.generationBIG.com
The problem is I don’t want to be on his staff. BTW, has Rangle paid all of his taxes?