Paul L. Caron

Wednesday, December 5, 2012

Top Marginal Tax Rate Will Exceed 50% in California, New York, and Hawaii in 2013

Gerald T. Prante & Austin John (both of Lynchburg College, School of Business and Economics), Top Marginal Effective Tax Rates by State and by Source of Income, 2012 Tax Law vs. 2013 Scheduled Tax Law:

This paper compares state-by-state estimates of the top marginal effective tax rates (METRs) on wages, interest, dividends, capital gains, and business income for tax year 2012 to the rates scheduled for 2013 under scheduled law. Scheduled tax law for 2013 assumes the expiration of the 2001 and 2003 tax cuts and the new PPACA taxes. Overall, the average top METR on wage income is scheduled to increase by approximately six percentage points (41.8% to 47.8%), while taxes on dividends would increase the greatest (19.0% to 47.9%). The top METRs on wages, dividends, interest, and partnership/sole proprietor income would exceed 50% in California, Hawaii, and New York City.

Tax | Permalink

TrackBack URL for this entry:

Listed below are links to weblogs that reference Top Marginal Tax Rate Will Exceed 50% in California, New York, and Hawaii in 2013:


Greetings: Can you report something on effective tax rates the high earners are actually paying. i.e. Phil Mickleson was crying he is paying 62% is he actualy or after work the system what willbe his effective rate.


Anthony M. Rodriguez

Posted by: Anthony Rodriguez | Jan 21, 2013 7:48:21 PM

Oops the paper got Oregon wrong. In 2012 they passed an 11% state income tax 39.6+11.0+3.8%-state credit would tie them with Hawaii.

Posted by: Nick Paleveda MBA J.D LL.M | Dec 6, 2012 10:16:55 AM

The paper appears to be inaccurate, since it doesn't take into account the Alternative Minimum Tax. Therefore the marginal rates are even higher than they say.

Posted by: eliy | Dec 5, 2012 11:06:39 PM

"the only way out of this mess will be secession"

It may ultimately come to that...but let me suggest a practical intermediate step that will put the Feds on their back feet (only fair since they will turn the guns the population paid for against the population when the sh*t does hit the fan...).

Here is the concept - issue a "Conservative Dollar" backed solely by the natural resources present in the Conservative States (Presidential results seem like a decent enough definitional metric for the time being - swing states can determine their own alliances when the time comes).

Conservative Dollars (CDs) will be a form of immediate economic secession.

CDs will be secured by the natural resource assets present in the Conservative States (CS) - their issuance will be tied to the supply of these assets.

No more Old Dollar (OD) money printing, quantitative easing, DC crack-headery to avoid making "hard" political decisions (or any decisions at all).

The coastal OD crack-heads can have the Old Dollar, their majority share of the accumulated National Debt, and their share of the coastline (until San Diego wants to secede).

CDs will be the only legal tender recognized in the CS - ODs will be exchanged at inception.

Look, the Old Dollar (raped and diluted to its breaking point already by DC) is the only thing holding this roiling, boiling country together as it is.

Once the Old Dollar's reserve currency status evaporates completely (count the bilateral currency agreements China now has with its world-girding trade partners...) the US as it is currently configured will cease to exist anyway - due to economic collapse.

Better the economic issues be resolved before the probably inevitable shooting starts.

(The generations of can-kicking ethical eunuchs in DC will then have to reconcile annual budget deficits of 40% immediately - does anyone with an IQ of 50 believe they are capable of doing so? With an accumulated debt in excess of 100% of GDP? Having already failed to come to terms for decade after decade after decade?)

(The syphilitic courtier class of DC cannot reconcile its own checkbook let anyone the ruined finances of the formerly United States of America).

Key takeaway - the Conservative States can issue their own commodities-backed currency as a form of intermediate soft-secession.

Part and parcel of this process will be the renunciation of a majority of the accumulated national debt/future liabilities by the new Conservative States - throwing the monetary burden of the accumulated debt/future liabilities upon their political patrons - the Coastal Fringe States.

We can call it "The Dollar Divorce".

Posted by: cas127 | Dec 5, 2012 3:49:00 PM

Meanwhile, the truly rich avoid paying any taxes on admittedly cool wrapper: "PPLI."

While the working stiffs trying to pay off their med school loans in Manhattan have student loan deductions "phased out," cause they so rich yet somehow their net worth is negative...because of their student loans. Wait...some of the richest 1% have a negative net worth? Unpossible. If you in that richest 1% you like probably have a pool in your walk-in humidor.

Posted by: Offshore Tax Attorney | Dec 5, 2012 12:20:40 PM

Federal bailouts are coming, don't kid yourselves. They'd be happening now if the GOP wasn't still clinging to the House. Once that goes, the only way out of this mess will be secession, and if present trends continue by 2040 or so that's going to start looking more and more realistic, just as is happening in Europe now.

Posted by: TallDave | Dec 5, 2012 11:08:45 AM

So it makes sense to increase the double taxation on dividends? Only to the completely ignorant!

Posted by: Fred17 | Dec 5, 2012 11:08:02 AM

These things usually do not include one or more of sales, gas, or property taxes (California; for instance has income and property tax...). Or how you get stuck with higher prices by design for everyday items due to price supports....

Posted by: Thomass | Dec 5, 2012 11:06:22 AM

Give to them good and hard, Dems. They're begging for it.

Posted by: Jeffersonian | Dec 5, 2012 10:59:23 AM

I know there have been times in American history where we have lived under a tax regime of rates near 75%, but good God, man, anything over and above 45% in the 21st century is just too damn high. The government honestly wants more than half of my income?!? Too quote the affable Jay-Z and Kanye West, "That s*** cray."

Very truly yours,

Lt. Dangle

Posted by: Lt. Dangle | Dec 5, 2012 10:38:22 AM

Yep, couldn't happen to a better club of socialists.

Posted by: Jimbino | Dec 5, 2012 10:30:28 AM

Let the hopeful idiots suffer their hikes in perpetuity? Fine. No federal bailouts when it crashes...and it will crash.

Posted by: P. Aaron | Dec 5, 2012 9:22:57 AM