According to the ABC News link above:
Obama's budget proposes $989 billion in new taxes over the course of the next 10
years, starting fiscal year 2011, most of
which are tax increases on individuals.
1) On people making more than $250,000.
billion - Bush tax cuts expire
$179 billlion - eliminate itemized deduction
$118 billion - capital gains tax hike
Total: $636 billion/10 years"
The simple result of this is people are not motivated to try as hard to make money because of the law of diminishing returns - each additional unit of variable input yields less and less output.
$250,000.00 the federal tax rate, according to news reports, will jump to 39%, this does not include the
fact that the One is also eliminating itemized deductions for mortgages, and
increasing taxes on capital gains (This does assume that Congress will push through the budget like they have everything else so far). Now also add state income tax of 15% and
sales tax of 8% that comes to 62% of every dollar made over $250,000.00 is
To put in simple terms you are a professional of some kind or another and you are able to charge $200.00 per hour. That means that for every hour you charge you are going to pay the government $124.00 off the top. That leaves you $76.00 gross profit. Once you subtract overhead – extremely conservative estimate that it is $10.00 per hour - then for every $200.00 you earn above $250,000.00 you have the actual use of $66.00.
another way, you work an extra 250 hours (that is 6.25 weeks of work) and earn
$50,000.00. You then pay 62% tax or $31,000.00, so you have a gross of
$19,000.00. Subtract overhead of $2,500.00 to get $16,500.00 net. You just
spent 6.25 weeks busting your ass to earn $66.00 an hour.
Let's see you can cut your expenses and stop working in November and December or you can continue to bust your ass so you can pay the government other people $33,500.00. The law of diminishing returns - at some point you just say screw it and stay home.