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1 If Health Surtax Is 3 Percent, Taxpayers in 24 States Would Pay a Top Tax Rate Over 50% 1 (2009)

handle is hein.taxfoundation/ffbhgxz0001 and id is 1 raw text is: FFISCAL July 2009FCT No. 176 FC If Health Surtax Is 3 Percent, Taxpayers in 24 States Would Pay a Top Tax Rate Over 50% By TF Staff New taxes to fund the federal government's plan for higher health insurance spending continue to be debated in Washington. According to a Washington Post report released late Fridayi, tax writers at the House Ways and Means Committee have agreed to propose a three-tiered surtax aimed at high- income tax returns. The top surtax rate would be 3 percent and may apply to married couples and single filers as follows: * 1 percent surtax on AGI between $350,000 and $500,000 (singles between $280,000 and $400,000) * 1.5 percent surtax on AGI between $500,000 and $1,000,000 (singles between $400,000 and $800,000) * 3 percent surtax on AGI beyond $1,000,000 (singles beyond $800,000) States have been raising taxes on this same group, leading to concern over how high the combined tax rates would be in each state, especially in the growing number of states with double-digit tax rates. Some commentators merely sum the rates at the federal, state and local level to give a statutory total tax rate. A more accurate method is to calculate the effective marginal tax rate, which takes into consideration deductions and adjustments. In Table 1 below we present calculations of the effective marginal tax rate on top earners, assuming that the current state income tax rates remain through 2011, the top federal taxable income rate rises as scheduled to 39.6 percent, and a new 3 percent surtax on AGI earned at very high-income levels is imposed.

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