Deval's Tax Increase and You.

     Deval’s Recent Plan to change our tax rates appears disastrous. We ran the numbers and the plan actually matches Obama’s plan to tax the rich. Deval’s plan is simple really. Cut the sales tax rate and increase the income tax rate by a whole 1%.This sounds bad for all residents and it sounds like it may help the rich who spend more on taxable items than do lower income folks. So where is the kicker?

     The second part of the plan is to double the exempted income from taxes. This means that a single person earning $14,000/yr will have his taxable income drop from $9600 down to $5200. At the proposed higher tax rate, this actually drops the income tax of people below the poverty rate by about $175 a year. Not bad! As the income increases, the amount of money saved steadily drops, breaking even at $31,900. A single person with no dependants will see an income tax increase once that person’s income exceeds $31,900. 

     A married couple at the poverty level would see a tax savings of about $350 a year. If you have children, this number will likely increase slightly more. As income increases to $63,800 the income tax will be the same as before under the new plan. The drop in the tax rate helps buffer the loss families of making over $63,800, depending on how much the family spends on taxable items.

Here are the numbers in the Tax Chart. For questions or tax help, contact us at Consolidated Bookkeepers. Visit my blog at www.eastienow.com