My effective tax rate dropped from 22.03% in 2017 to 19.94% in 2018. So a drop of 2.09%. Not huge from a percentage standpoint, but a decent amount considering my income which usually hovers around $200,000. Mind you I am already in a pretty low cost area, living in Central Florida.
Personally, having come from Canada, I think the taxes in the USA are outrageously low. My brother, who is a medical doctor, gets taxed around 50% on Ontario. His income is much higher than mine, probably in the $500,000 range. However, if I was living in Canada with my current income, my tax rate would likely be similar to his. Potentially higher since he has dependents and I don't. And if he was living in my area of the USA, my guess is his effective tax rate would be in the mid to high 20s.
It is somewhat sad that any talk of raising taxes in the USA is considered sacrilege at this point. We could do so much with what is tantamount to a little extra money such as improving schools, providing more comprehensive health care and having a more solvent social security and medicare system. I don't know why it is so hard for the Democrats to simply posit the notion of more tax brackets for higher income earners. You could technically leave the majority of the tax brackets the same and just add new ones. Our current tax brackets stop at $500,000 for singles or $600,000 if filing jointly. With a Federal rate at that point of 37%. Would it be that difficult to create some additional ones? Something like:
$500,000 - $1 million : 39% $1 million - $2 million: 41% $2 million - $4 million: 43% $4 million+ : 45%
This could be tweaked, but is this really that hard a sell? It won't change the tax rates of the vast majority of people. And this tired old canard of Republicans saying it would hurt small business owners. I call BS. Virtually all businesses are LLCs of some sort. They are taxed differently. This only affects a person's individual income.
Re: The Effect on the Deficit of Cutting Social Security and Medicare: Zero
quote:ironically, the stock market was helped by investing in federal treasury bonds, because the resulting reduction in interest rates, made the treasuries less attractive to investors, so they invested more $ in the stock market
The downsides however with the existing policy of the Fed and the government is that retirees now have to allocate more money into the stock market in retirement. Which is far more volatile. In the past, bonds yielded higher returns thereby allow for more stable investment income for people in their Golden Years.
The other downside is we have had several bubbles manifest in the stock market as a result of continued low interest rates. Dot Com, the Housing Bubble and other smaller ones that make the overall stock market far more tenuous and prone to large corrections. In fact, I am pretty certain we are in another bubble in technology stocks. Social media companies like Twitter and others have high valuations but generate very little revenue. Tesla is in a similar situation and the upcoming IPOs of things like Uber show exorbitantly high valuations that are in my opinion, completely unjustified relative to their current revenue levels and business models.