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How Taxes Increased for the 'Rich' in 2013

At the Tax Foundation's Tax Policy Blog on August 27, 2015, Scott Greenberg reported on the dramatic increases in the taxes of the "rich." In his post, Greenberg first provides some background:

"2013 was a year of many changes to the U.S. tax code, and some of the most significant changes were targeted at raising taxes on high-income Americans. The fiscal cliff tax deal created a new 39.6 percent income tax bracket, raised the top rate on capital gains to 20 percent, and imposed a limitation on itemized deductions for high income Americans. Meanwhile, the Affordable Care Act’s new 3.8 percent Net Investment Income Tax went into effect at the beginning of 2013.

"By the end of 2013, it had become clear that these changes would lead to a much higher tax bill for high-income Americans, but just how high would their taxes rise? New data from the IRS, released yesterday, shows how tax rates for high income Americans changed between 2012 and 201."

Greenberg includes the following Tax Foundation chart, which shows the effect of those higher tax rates on adjusted gross income:

 

He then proceeds to explain the two stories going on with this data. The first, he says, "is that Congress and the President decided to raise taxes on the wealthy, and then the wealthy paid more in taxes. The higher rates shown above are largely due to the 39.6 percent bracket, the 20 percent capital gains rate, the Pease limitation on itemized deductions, and the Net Investment Income Tax – all instituted by Congress between 2010 and 2012."

Using several charts, Greenberg also explains how "taxes on the wealthy are higher because Congress raised them, and taxes on the wealthy are higher because capital gains realizations are down – we’ve run a rough simulation of what proportion of the tax increase in 2013 was due to changes in capital gains income."

Nevertheless, presidential candidate Sen. Bernie Sanders, who is seeking the Democratic nomination, wants to increase the top tax rate to 90%, according to the Daily Caller.

Kudos to the Tax Foundation for continuing to publish their helpful tax information.

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