Tax Break

Who pays the top income tax rate?

President Obama wants to raise the top marginal income tax rate on salaries and other ordinary income from 35 percent to 39.6 percent by letting the extended temporary Bush tax cuts expire at year-end. 

Mitt Romney wants to drop the top rate by a fifth to 28 percent (and running mate Paul Ryan has called for a top rate of 25 percent).

So who pays the 35 percent rate? How much do they pay? And how much more would they pay if the Clinton-era rate of 39.6 percent were restored?

As this graphic shows, had the 39.6 percent rate been in effect in 2009, a few people making as little as $100,000 to $200,000 would have been affected. The total increase per taxpayer in that large group would be less than a penny each.

 The tiny group of 8,274 taxpayers who made more than $10 million in 2009, and collectively reported 3.1 percent of all the adjusted gross income that year, would pay on average $687,500 more if the permanent Clinton rates return.

Essential reading: FBI, Secret Service deepen Romney tax mystery, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* FBI, Secret Service deepen Romney tax mystery. Delvin Barrett – The Wall Street Journal. The two local Tennessee political leaders who received envelopes claiming to contain long-secret Mitt Romney tax returns said they didn’t believe the strange claims in the anonymous letters and didn’t take it seriously until the Secret Service knocked on their doors Wednesday. Earlier Wednesday, accounting firm PricewaterhouseCoopers said it had no evidence that anybody had gained access to Romney’s old tax returns, following a report that hackers claimed to have broken into a PwC office in Tennessee and were threatening to release the tax information. Link  

* Online buying surges as tax deadline looms. The San Francisco Chronicle. Chris Cheng doesn’t need 40 hand warmers right now, but the longtime Amazon.com customer is loading up on them anyway. With the Internet retail giant set to begin collecting sales taxes on California purchases Sept. 15, the San Francisco resident is among many tech-savvy consumers trying to cram in some last-minute tax-free shopping. Link

* Soda tax war taking shape in two California cities. Lisa Baertlein and Martinne Geller – Reuters. Two small California cities are the latest battlegrounds in the $111 billion U.S. soda industry’s fight to defend a near-perfect record of defeating proposed taxes on sugary drinks. In November, voters in cash-strapped Richmond and El Monte will decide whether to pass penny-per-ounce taxes on sugar-sweetened drinks to bolster municipal coffers and fight obesity. Link 

Essential reading: How Romney avoided a controversial tax practice, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

 * How Romney avoided controversial tax practice. Mark Maremont – The Wall Street Journal. Mitt Romney appears to have dodged a bullet after his lawyer said last week that the GOP candidate never engaged in a tax practice that’s now being investigated by New York’s attorney general. The statement, however, created another mystery: How did Romney avoid getting involved in a tax practice that appears to have been widely used in recent years at his old firm, Bain Capital? Link  

* Facebook says no secondary offering to cover tax bill. Alexei Oreskovic – Reuters. Facebook Inc promised not to sell stock to cover a nearly $2 billion tax bill and said it will allow employees to cash in their stock weeks ahead of schedule, moving to soothe nervous investors and its own staff as its share price spirals downward. The world’s largest online social network company, which has lost more than 50 percent of its market value since going public in May, said on Tuesday its total shares outstanding will be reduced by roughly 101 million shares as a result of the move. Link  

* Reid renews attacks on Romney’s tax disclosures. John McKinnon – The Wall Street Journal. Senate Majority Leader Harry Reid renewed his hard-nosed attack on Mitt Romney over the Republican’s personal taxes, during an appearance at the Democratic convention Tuesday. This time, though, Reid seemed to pull a couple of his big punches. Notably, Reid didn’t repeat his well-publicized charge that Romney hasn’t paid any taxes for a decade, perhaps because Romney has categorically denied that charge. Link