I’ve gotten some interesting responses to my article on the proposed Obama tax plan, including a few which have told me flatly that I am wrong. Take this Sally Sobstory email, for example:
My husband and I both work full time and have a combined income of just over $250,000. We live in Stamford, Connecticut where the average home (even with recent price declines) is more than $800,000. We pay hefty property taxes (to the tune of $1,500 a month) as well as New York state income tax (8 percent) since our jobs are both in New York. Daycare in our area is also expensive due to the high cost of living. After our fixed expenses, we literally have nothing left over. I can assure you that we are far from rich and $625 a month is not pocket change to us.
Well, isn’t that a kick in the teeth? But wait. Even this poor suffering soul misses the point. Mrs. Sobstory was kind enough to point out these detailed facts about her situation, and clearly does not understand that the Obama tax plan as proposed will tax the net taxable income, not the gross income.
Based on her situation, there are a number of tax exemptions that are already available to her — and if she and her husband aren’t itemizing, then there’s a good chance that she’s been paying way too much in taxes already. Plus, she would probably not be hit with a tax increase.
Let me explain.
First off, the median home price in Stamford is $459,000 according to CNN/Money.com. However, it’s the 4-bedroom home that’s got the median price of $800,000. The median income in the area is nearly $80,000.
- This tells me a number of things:
- Her income is well above average.
- Her home price is well above average. She’s paying 18,000 per year in property taxes alone, which indicates a rathery pricey mortgage payment with at least 100,000 per year in interest.
By the way, interest on a primary mortgage is usually tax deductible. So are the property taxes and state taxes. In many cases, the cost of daycare is also deductible. With all of these deductions, plus their standard deductions, their taxable income is just over $100,000.
Based on this information, her taxes would likely not increase. In fact, there’s a chance that they might actually decrease.
Disclaimer: The information provided is the opinion of the author is not intended to be authoritative. Readers should additionally seek the advice of a competent Certified Professional Accountant for their exact situation.