The Brian Sullivan Blog
  • October 23, 2008 04:42 PM EDT by Brian Sullivan

    How Does 37.7 Cents on the Dollar Sound, Californians?

    The Milken Institute in California had a debate on the economy and economic politics today between businessman Leo Hindery and Stanford professor Michael Boskin.    The video is on the Milken website.

    I know Leo well and have interviewed him many times.  He's a very smart guy and successful businessman.

    I am not as familiar with Michael Boskin, so I was researching him and came across his personal website.   On it, he has posted his analysis of the possible tax implications of the Obama-Biden plan.    Boskin is an advisor to John McCain, so keep that in mind when reading it, but since he's a professor at one of the most prestigious schools in the country, one would have to believe he knows his numbers.  Those numbers are scary, and not much better in other states with high state income tax rates.

    From Boskin's piece: (link to the full piece attached)

    Obama would raise the top marginal rates on earnings, dividends and capital gains passed in 2001 and 2003 and phase out itemized deductions for high income taxpayers. He would uncap Social Security taxes, which currently are levied on the first $102K of earnings.  The result is a remarkable reduction in work incentives for our most economically productive citizens. The top 35% marginal income tax rate rises to 39.6%; adding the state income tax, the Medicare tax, the effect of the deduction phaseout and Obama’s new Social Security tax increases the total combined marginal tax rate on additional labor earnings (or small business income) from 44.6% to a whopping 62.3%.

    People respond to what they get to keep after tax, which the Obama plan reduces from 55.4 cents on the dollar to 37.7 cents, a reduction of one-third in the after-tax wage! Despite the rhetoric, that’s not just on “rich” individuals. It’s also on a lot of small businesses and two-earner middle aged middle class couples in their peak earnings years in high cost-of-living areas.

    Think about that - 37.7 cents of your earned dollar!   If those numbers are accurate it would go to my previous posting about tax rates and work effort.    That's quite a cut.

    Do remember this analysis is based on a state with high income taxes.   That 37.7 cents would not be quite as bad in states with lower (or no) taxes, but no doubt that 55.4 cents would still come down dramatically.

    We will reach out to the Obama camp to get their comment on these staggering figures.

Super Sucker

I can only speak for what I will do if this comes to pass. I have my own successful service oriented business. I enjoy a good income only because I work at it more than 80 hours per week. The only reason I would continue to work like that under the Obama plan is if I put no monetary value on my personal time. If that is the assumption, it is faulty. When the government gets more of the fruit fom my labor than I do, the labor will slow down to a government employee's level. Employees will be let go, and, although I will have less disposable income, I will have personal time that I have not had for years. Actually, I will be able to live with that. My only apprehension is the harm it will do to my customers, since more than half will be informed that I will no longer be working for them. However, assuming they are a resresentative sample of the general population, they will be getting exactly what they are voting for.

October 24, 2008 at 1:31 pm

Robert

On the brightside if he is elected I can now remove helthcare from my cost,go ut of business and drop down to be one of the 40% that will get a check now. Since good ol brother obhama is going to own the houses. my neighbors who bought a $400,000 home being unemployed when they bought it never made any payments and just got a write down to $200,000 from Bank of America at 5.2% 30 year fixed. They never paid HOA and my bank says since I am not behind I don't need help. Well guess what I am tired of working 15 hours a day 7 days a week and paying salary and missing my kids. I decided as soon as he is elected dumping health care and letting gov pick it up they have a nice system. Then after all my low life neighbors get the write downs letting all mine go so they can be upside down again and let Bank of America choke twice. Then drop myself down to be one of the 40% that get check every year and buy steaks with the other food stamp people (tired of chicken) and letting my employees go as soon as they extend those unemployment checks for 48 months. By the way I called my congressman asked him if congress was going to take pay cut and he said "there is no vote for it" A**HOLE knows they have to vote no to not get it !!! Done stck a fork in the pig lipstick and all

October 24, 2008 at 2:32 pm

Working too hard in California

For us Californians trying to fight back... http://www.hjta.org/ -A

October 24, 2008 at 2:47 pm

LIBERTY!

When has our gov't done anything right?

October 24, 2008 at 4:06 pm

Ohio MBA

To nobody in CA. Succession wont work for you all. your broke remember. Get some of the Obama funds prior to leaving if you wish to have any success. However unless you change your ways those funds wont last long. The fruits and nuts liberals will have it all spent on Acorns and giveaway programs in short order. Class warfare and race wars never seemed a probability in America, Now I am begining to wonder. I lived in Quantico VA during the race riots of the 60's as a kid and was terrified they would come to my house. I moved to Irvine Ca in the early 90's and was there for the race riots. I move to Cin Oh in 97 and damn if we didnt have race riots here. NOW

October 24, 2008 at 4:24 pm

Ohio MBA

To nobody in CA. Succession wont work for you all. your broke remember. Get some of the Obama funds prior to leaving if you wish to have any success. However unless you change your ways those funds wont last long. The fruits and nuts liberals will have it all spent on Acorns and giveaway programs in short order. Class warfare and race wars never seemed a probability in America, Now I am begining to wonder. I lived in Quantico VA during the race riots of the 60's as a kid and was terrified they would come to my house. I moved to Irvine Ca in the early 90's and was there for the race riots. I move to Cin Oh in 97 and damn if we didnt have race riots here. NOW I AM CONCERNED AGAIN.

October 24, 2008 at 4:25 pm

Charlie Barker

I see that a lot of folk out there understand what Obama is, a Marxist. He is leading the non-thinking entities on feet to a Marxist government. I hope Americans wake up and vote against Obama. I will not hold my breath!

October 24, 2008 at 4:30 pm

Joe the Lib

Good day all, First, thanks to Brian for finding and sharing this information. It definitely helps to frame ones thoughts on take home and taxes. I don't think most people understand the complexity of our entire tax structure(payroll, income, sales, etc.) until you put it into dollars and cents. On to the rant: After reading the whole article and some of the comments, I'm amazed we even have a country anymore! At some point in our past, when faced with federal income tax rates of 90%, the strong, enterprising people of this country did not stop working, or growing businesses, or investing. They continued on the path that made this country great. They didn't give up, give in or leave. Based on some of the comments I'm seeing here, those people were fools. Let's rethink that a bit. I am going to go out on a limb and guess that 98% of us commenting did not inherit a significant portion of our wealth. Of those, I'm going to say at least 75% had jobs before college, that paid minimum wage or near, and we moved up through the economic ladder, doing a little better each year and at each job. Now, hopefully, we represent the economic middle class or better. If that's so, haven't we made the decision to move our income up into a higher tax bracket at least 3 times? If you're in that magic unlimited highest bracket, you made the choice 5 times! But now, that the number is moving up again, oh we're done for. DONE. The rich will leave the greatest country in the history of mankind over this. And go to Canada. Or France. They don't value this country, and it's rights, priviledges and freedoms. They can get better elsewhere. I hear there are better schools in China, better healthcare almost everywhere else and much lower income taxes in Korea, Australia, Japan and Mexico. Based on history, that's not the case. The great among us will continue to do great things. Workers will work, thinkers will think, leaders will lead and we will remain strong. I think, overall, it's better to be an American than a citizen of any other country in the world. For enough reason that a change in the tax structure can't make me leave. If I don't like it, I talk to my neighbors and I vote to change it. Be well and stay safe all, Joe

October 24, 2008 at 5:15 pm

about this blog

  • Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block. Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.

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