Higher tax obligations from the “American Taxpayer Relief Act of 2012”

by philg

A recent newsletter from the bank notes that the American Taxpayer Relief Act of 2012 effectively saddles people with an income over $258,000 with higher tax rates. The higher effective rates come from the fact that these individuals can’t deduct the full amount of mortgage interest, state tax payments, charitable contributions, etc (for a person with a high enough income, only 20 percent of the amounts spent can be deducted, thus resulting in a tax reduction of only about 10 percent of the amount spent/donated).

Readers: What are some other examples of federal laws whose names suggest the opposite of what the law does?

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10 thoughts on “Higher tax obligations from the “American Taxpayer Relief Act of 2012””

  1. “What are some other examples of federal laws whose names suggest the opposite of what the law does?”

    Most of them. The question should be, “which laws actually do what they purport to do?” This would be a much shorter list.

    So a better title for this law would be “The Charitable Donation and Home Buying Discouragement Act of 2012”.

  2. Farm Bill – Subsidies for big farm business to grow subsidized food for animal feeds.

    Patriot Act – Break all the Laws and give immunity to break those acts.

    Social Security Act – They will be all dead before they use this insurance act.

    Medicare Act – Give money to hospitals and insurance act.

  3. Lets not forget the “Affordable Care Act.”

    When my wife and I switched to an Obamacare approved plan from our previous individual plan, it was anything affordable. About the same as our monthly mortgage payment in fact.

    Perhaps you can relate Phil since you just enrolled in a Massachusetts plan? And I’m guessing you weren’t eligible for a subsidy.

  5. Considering that they make more than $258,000, I don’t think “saddle” is the right word.

  6. ScarletNumber,
    Why isn’t “saddle” the appropriate word? No one else is forced to pay those sorts of taxes.
    I know, let’s tax the affluent into submission and then wonder why businesses are decreasing their hires every year.
    PS
    And $258K is not my definition of affluent.

  7. This law’s name is not Orwellian double-speak. It’s not called the “Every Single American Taxpayer Relief Act of 2012”. The Bush tax cuts were set to expire, the law reinstated the ones that covered the middle class in perpetuity, but not the ones for higher income brackets, hence the tax rise compared to previously for upper-income households ($258K was somewhere between 96th and 97th percentile in 2011), but less than it would have been had the Bush tax cuts expired and not been replaced. So it was still tax relief for the middle class, but not for the highest brackets.

  8. What Fazal said.

    @Mark – $250K a year (for a single filer) is in the top 3% of the population. Or at least 5X the average income. What is your definition of affluence?

  9. $250K a year in the cornfields of Iowa = affluence. In the concrete canyons of Manhattan, or among the terrible weather and annoying accents of Boston, not so much.

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