Some Fuzzy Math
This hasn't been discussed much, but did you know that the income tax cut from 7 percent to 5.4 percent flat rate proposed by Gov. Jon Huntsman Jr. is actually a 23 percent cut in the rate?
A CPA pointed that out to me the other day. While most people look at the 7 percent to 5.4 percent cut and say, well, it's a 1.6 percent cut, the actual drop, benefitting mostly the rich, is considerably more dramatic.
I, personally, became a writer because of my math skills. But the CPA points out that to get the true percent of decrease, you take 1.6 divided by 7 and, voila, you have your difference: 23 percent.
If one were to propose a 23 percent tax increase, imagine the reaction. But now the Legislature is poised to pass a 23 percent tax cut, mostly for the rich, which will deplete the state's revenues by $70 million during a time when schools still are suffering from lack of resources.
Cheers,
Paul Rolly
A CPA pointed that out to me the other day. While most people look at the 7 percent to 5.4 percent cut and say, well, it's a 1.6 percent cut, the actual drop, benefitting mostly the rich, is considerably more dramatic.
I, personally, became a writer because of my math skills. But the CPA points out that to get the true percent of decrease, you take 1.6 divided by 7 and, voila, you have your difference: 23 percent.
If one were to propose a 23 percent tax increase, imagine the reaction. But now the Legislature is poised to pass a 23 percent tax cut, mostly for the rich, which will deplete the state's revenues by $70 million during a time when schools still are suffering from lack of resources.
Cheers,
Paul Rolly
3:28 PM
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3 Comments:
Your math still needs some work. You wrote "But now the Legislature is poised to pass a 23 percent tax cut..."
No, taxes are not being cut 23% for the rich because the base is being expanded. That's why it's called a flat tax. In Utah, the top 1% have an effective tax rate of 5.66% based on AGI. That means that a flat tax of 5.35% (not 5.4% as reported in your blog) is a reduction 5.5%
As a follow up to the previous post, the 5.66% effective tax rate (ETR) is an average for all taxpayers in the top 1% so some may get more or less than a 5.5% reduction.
If taxpayer in the top 1% receives a large percent (compared to others in the top 1%) of his/her income in the form of non-ordinary income such as dividends and capital gains, his/her current effective tax rate could be higher than 5.66% because the feds tax these sources at lower rates which means the taxpayer will have a lower 50% federal tax deductibility on Utah state income tax. Since federal deductibility is not part of the flat tax, the ETR cut could be greater than 5.5% for these types of taxpayers.
Then there's the issue of whether some income that is currently added to AGI will be added back on the flat tax. This could impact changes in ETRs as well.
The only thing worth reading today in your newspaper is the column by probable ACLU sympathizer and current s.l. attorney ed rutan praising those amrikan patriots who stood up to israeli bullying tactics and smear jobs. Hello doug write.
and it is only worth reading to find out that you are still suppressing the truth, i.e. google: "mighty wurlitzer" +cia
Your newspaper is oviously more interested in the well being of usa than in israel's security situation. How can this be?
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