I’m seeing lots in the news these days about the “Tax the Rich” ballot measure, the Invest in Education Act. The problem is, lots of us tax-math impaired folk don’t understand how the added tax would work if the measure passes. I went and talked to some people who know more about taxes than I do, and I have a better understanding of how it works. Now, I’m taking it upon myself to explain what the new tax would mean to the one percenters who would pay it, in a way even I can understand.
First, the basics. If the Invest in Education Act passes, an individual making more than $250,000 or a couple making more than $500,000 will pay a higher state tax rate than the rest of us. If an individual makes $500,000 or a couple makes $1 million, the tax rate is even higher. The extra taxes go toward funding education.
Arizona’s current personal income tax rate is 4.54 percent. It would go up to 8 percent when an individual’s income hits $250,000 or a couple’s hits $500,000, then 9 percent at $500,000 for an individual or $1 million for a couple.
So what does that mean in terms of money for the one percenters? Let’s use a couple for this explanation, just so I don’t confuse things by trying to include figures for individuals and couples.
Let’s begin with what the tax measure doesn’t mean. It doesn’t mean a couple making $499,999 pays 4.54 percent on all their income, but add a dollar and they pay 8 percent on the whole $500,000. Uh uh. Not at all. Adding that one dollar doesn’t bring a tsunami of new taxes down on their heads. The rate on the first $500,000 is the same as everyone else’s: 4.54 percent. Every dollar above that is taxed at the higher rate.
Let’s say our hypothetical couple makes $500,100. Their added tax will be—get ready for it—$3.46. That’s right. If the Invest in Education Act passes, they’ll pay three dollars and forty-six cents more than if it fails.
See, the new 8 percent rate is 3.46 percent higher than the current 4.54 percent rate, and 3.46 percent of $100 is $3.46. If the couple buys one less Cafe Latte Grande at Starbucks that year, they’ll come out even.
For that couple to pay a significant amount of extra taxes, they have to make significantly more than $500,000. Let’s increase their income by $100,000, to $600,000. Their added tax will be $3,460. OK, that’s real money. If you’re one of those people who live from paycheck to paycheck on an average income, paying an extra three grand and change in taxes would really hurt. But for the couple making $600,000, $300 or so every month isn’t going to put much of a crimp in their opulent lifestyle. They shouldn’t find it hard to make ends meet with what they have left.
If that couple’s income breaks through the $1 million mark, every dollar over a million that will have an added one percent tax—from 8 percent to 9 percent.
OK, that’s the way the tax rates will work if the Invest in Education Act passes. But the tax bite for the rich is less than it looks like in my explanation so far. That’s because there’s a big difference between the couple’s total income and their taxable income. None of us pays taxes on all the money that comes in. We only pay on the amount that’s left after we take all our deductions.
A couple whose total income is in the $500,000 ballpark wouldn’t come anywhere near having to pay the extra Invest in Education Act taxes. By the time they take all their deductions, their taxable income will be far below the line where the new tax kicks in. I don’t live anywhere near that rarified half-a-million-dollar income neighborhood, so I don’t know how much one percenter couples manage to deduct from their total incomes, but I’m sure after they’ve paid a good accountant to do their taxes, it’s a big chunk of change. (Maybe a tax pro can chime in and give us an idea how big a chunk it is.) That means a couple has to make significantly more than $500,000 before they have to think about paying a penny in added tax.
The truth is, the wealthiest Arizonans aren’t paying their fair share of taxes. I’ve written about that in earlier posts at some length. But the Invest in Education Act isn’t a punitive “Soak the Rich” measure by a long shot. When you break down the amount one percenters will pay if the measure passes, it won’t be a major burden on their incomes or their lifestyles. But putting
that extra money into school funding will mean a world of difference to our school children.
This article appears in Jun 7-13, 2018.
Liberals are great at devising schemes to spend other peoples money. You will never admit it, but 10 years from now when we are spending $20B more on education your grandchildren will be whining that education needs more money. Money can’t fix broke. Public education is broke. And the liberals broke it. Don’t reward their ignorance.
Many Americans are working hard to become one percenters. This disincentive (confiscation) will cause more deductions to be added by lawmakers attempting to keep producers producing.
How about we cut the free meals and let the parents shoulder some expense for educating their own kids?
” But putting that extra money into school funding will mean a world of difference to our school children.”
No it wouldn’t. It would expand and benefit administrations. Has before and it will again.
Vote NO on school bonds. Every time.
Punish the achievers. Same old liberal mantra.
It makes sense to me that we should pay for improved schooling – maintenance, buildings, teachers and other skilled workers – as a community. So, this isn’t really spending other people’s money, it is trying to find an equitable solution to get what is needed to reach the goal of excellent education for all children in Arizona. All of them, rich and poor. So, in real life, people pay in proportion to what they earn as part of the community. Together, it costs way less per individual taxpayer than if we try to do this individually. So get off the liberal/left/right/etc. labels and consider how this gets done.
So, the wealthy get to pay more for our children’s indoctrination? Yep, sure sounds “fair” to me.
Yes. It is commonly referred to as public education. We are all being victimized by it. But you can get the 99ers to support punishing the successful 1%. Another scheme doomed to fail, but I have to give them credit. They pursue mo money like an addict for a fix. But it never satisfies.
It may be true that throwing money at education won’t improve it, but taking money AWAY from education will certainly make it worse.
When students leave, money leaves. Students are leaving.
Lets see: the largest public school district in Pima County has chronic problems with Board governance, chronic challenges making student-centric applications of funds, a chronic unwillingness to engage in student-centric policy making, and a chronic, depressing, repeatedly and copiously documented inability to deliver quality services to tens of thousands of poor students in its schools. Time after time, funds are granted and those who have asked for them seem to have no power or willingness to ask that they be applied to benefit students: 302, 123, RedforEd. But, just as with every previous INCREASE FUNDING! initiative, when you pitch it to the public you get out the violins and talk as though the next additional tax levied will usher in a new era of quality education equitably delivered. Putting that extra money into school funding will mean a world of difference to our school children!
No, David. Not unless your political party starts holding those with power to decide how funds are applied accountable. In other words, NEVER, because you and your pals have a demonstrated history of chronic irresponsibility in the funding- and policy-accountability department.
You pitch as though you think its hard-heartedness or greed behind your oppositions unwillingness to vote in support of the next magic tax you propose, but its not: its recognizing who the people asking for the money are and what they are ACTUALLY capable of, which is NOT putting students first or ensuring the delivery of high quality education, but is instead ensuring the perpetuation of high quality machine-style politics and high quality strengthening-of-crony-networks. While your crowd continues to influence or control local public school districts, the best policy solution is to make per-pupil funding portable and let people apply it in more effective, better managed schools outside your network, but you oppose that, of course. Perfectly comprehensible once the true motive is clearly understood: to maximize the amount of money the network controls, not to maximize the quality of education delivered to unfortunate students locked into the networks schools.
In Arizona, a fair number of those wealthy folks are retirees…. living off of funds accumulated over 40+ years of work/investment/savings. . They usually don’t have a child or grand child in local schools. That money is quite portable . If the state takes more, they go to another state. Texas , Nevada, and Florida have NO state income taxes , warm weather, and a senior friendly infrastructure. . Living the Marxist dream may be difficult if the tax paying chumps are in Austin, Las Vegas, or Naples.
Democrats have a new idea – they will raise taxes.
Uh, wait. Same idea as last year, just a different package.
Never wholly separate in your mind the merits of any Political Question from the men who are concerned in it.
The question is not, what would happen for children in our region if the money requested were passing into the hands of competent, honest, virtuous educational administrators, but what will happen to it when it passes into the hands of the people governing and administering the largest public school districts in Southern Arizona?
David Safier and his fellow travelers (including those who concocted 301, 204, 123, and REDforED) should be asked to prove and document good outcomes for students IN THOSE DISTRICTS resulting from the application of funds they begged and received together with a pie graph showing the percent of Pima Countys student population those districts comprise. Report after report has been produced on what was done with desegregation funds and precious little in the way of student benefit has been documented. No wonder we find TUSD trying to eliminate the official standing of commenters like Sylvia Campoy, who track and report on application (and non-application) of funds. Little that TUSD does with funds that have been begged in the name of the poor students and the demands of social justice will bear examination, and the district would dearly love to eliminate the reporting that continues to make this plain to any members of the public who care to look into it.
Responsibly administered districts are able to pass bonds when they appeal to those closest to them who know what they are doing. System-wide funding allotments like the one promoted here are wasted in some of our oversized districts with poor governance and administration and weak citizen advocacy. Until the Democratic Party in Southern Arizona develops a way of holding these districts, with which their Party-promoted politicians are entwined, accountable (until pigs fly…?), voters should reject requests for across-the-board funding increases as the scams they most certainly are.
They can’t do it. Even redfored money has already begun to be pilfered. It will not get to the teachers because of dishonest admin. There is no point. They killed public education in Tucson.