Two Retractments

First, everyone, it turns out we are not buying our condo. We had the inspection done, had some good honest discussion, and ultimately decided to terminate the contract. We were within our 10 day "no questions asked" ability to terminate. Sad, yes, but we will be renting another couple of years until we can afford a place we want near a good school.


Second, I do need to correct and clarify information in respects to my "tax training" post. I never want to mislead anyone and if I ever post something that turns out to be incorrect, even in part, I will be the first to admit it and make sure you all know.

First, it is true that if the Bush Tax Cuts are allowed to expire we will have prior 2001 tax rates which were 15%, 28%, 31%, 36%, and 39.6%. They have been for the past 9 years 10%, 15%, 25%, 28%, 33% and 35%. What will happen is the 10% bracket would disappear all together, dissolve into the 15% group, and the rates would be 15 stays at 15, 25 to 28, 31 to 33, 35 to 39.5. This is where I made an error, assuming 15% would jump to 28%. So no, you won't see a 13% jump to 28%, just a 3% jump to 28% and only because you've already been paying in the 25%. Although I certainly doubt any of you are feeling much relief.

Here is where and why there is room for speculation and why you will hear several different claims about 2011 tax rates. First, Obama has proposed in his 2011 budget to keep rates where they are for middle class earners, extend some of the tax cuts. They would still go up for high income earners. However, his budget has not been approved yet. Second, because of inflation and other factors, no one knows yet where the exact cut off point at which one will jump into the next tax bracket will be placed. I have seen several tables that speculate where these levels will be. The table I used to get my 28% $70K number had adjusted 2001 cut off points for 3% inflation. Another table brought to my attention had the 28% mark estimated at as low as $57K for married joint filers, even worse.

Here is a quick lesson in taxes for everyone that you might find useful: these tax rates are called marginal rates. Our tax system is called a progressive system, meaning the more you make the higher percentage of your income you pay. This is an easy way to explain it (note all numbers and rates are fictitious): You live in a country that has rates of 10% for $0-$10K, 20% for $10,001-$60K and 30% for everything above $60K. If you make $80K a year you will pay like this: your first 10K will be taxed at 10%, from 10K to 60K you will pay 20%, your final 20K will be taxed at 30%. Your entire income was not taxed at 30%. 30% is your marginal rate, what you will be taxed on any additional dollars earned from where you currently stand.


Just as a note, I do not retract any of my statements regarding the health care bill. My information was correct in that respect. And I used an overly simplified example to illustrate a complex principle, like we do in school. You can do the math and even if there were 10 healthy people for every 1 very unhealthy person (even when projected into a pool of 300 million) with price discrimination based on health made illegal, you will ultimately be paying for their bills. Lots of it. If you like that sort of thing then socialized medicine, where we are headed, is for you. I don't like that sort of thing. I like the idea of everyone being accountable for themselves and being self reliant. (I do believe in helping others and receiving help from others, but I do not believe in government acting as the middle man and dictating how it is done.) It's easy to see how humans act and what motivates them to do better, and if one is never held to the consequences of their actions and the outcome is always the same no matter what they do (kind of like Satan's plan) it makes for some bad news. And just as a note, the history of socialism is that while it has always reduced the gap between rich and poor it has also always dramatically reduced the income/quality of life of the average citizen. So yes, no rich and no uber poor, just the extremely powerful and uber rich elite that make the laws and lots and lots of poor.