In a pro-life discussion recently, I suggested that we could eliminate the deficit & provide full funding for WIC for every child between conception and 5 years old with a mere 5% increase in the top marginal tax rate. That got me the comment that it would raise real income taxes to more than 51% on the wealthy- but tax brackets don't work that way.
Here is how tax brackets *really* work., with a handy calculator that I will deconstruct below- but of course, this leaves out the now nearly 20% FICA taxes, right?
Not quite- FICA doesn't have an infinitely large top tax bracket- FICA ends at $106800 of income- it tops out at $21300 per individual earner.
So let's do some calculations on what demographers now tell us is the top of the upper middle class- a single businessman, sole proprietor, earning $500,000/year (to earn more you have to be a hedge fund manager or have a lot of capital in investments).
According to the Calculator on the MoneyChimp site that means:
Tax: $ 152314
...as a percentage of income: 30.46 %
Tax Bracket: 35 %
Adding in the FICA:
Tax $ 173674
...as a percentage of income: 34.7348 %
Tax Bracket : 35%
Now let's rerun the numbers with a 40% top tax bracket, changing no other tax brackets:
8500-0 * .1 = $850
34500-8500 * .15 = $3900
83600-34500 * .25 = $12275
174400-83600 * .28 = $25424
379150-174400 * .33 = $67567.5
500000-379150 * .40 = $48340
Total Tax: $179656.50
...as a percentage of total earnings: 35.9313%
Marginal Tax Bracket 40%
Leaving our small business owner $320,343.5 to reinvest in his business, give to charity, or live on, in accordance with his property rights under US Law and _Caritas In Veritate_.
For a mere .9313% increase in *real* taxes as a percentage of total earnings, we could achieve the pro-life goal of having good nutrition for every child between conception and age 5 (to do that you've got to feed the mother between conception and birth of course) and pay the federal debt back down below 60% of GDP, just like it was back in the Clinton Administration the last time WIC was fully funded and the deficit was below 60% of GDP.
Isn't that worth the cost?
And if you're thinking, why do this during a recession, may I suggest you read this rather interesting economic theory:
The $38.5 Trillion hole nobody talks about
Answering the question of the poor woman trying to choose between feeding her family and another birth with "We will support you in beginning to raise this child" is the only truly moral answer to economic abortion.