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Open Thread: Where Will the Top Tax Bracket End Up?

Posted By Barry Ritholtz On December 17, 2012 @ 7:00 pm In Politics,Taxes and Policy | Comments Disabled

May I throw the DUH flag on all the whining about the $250k top bracket? I am going to go out on a limb and suggest that $500k is a number all sides will live with for the 39% bracket.

First, let’s talk history: That top bracket dates back to 1993, and if we inflation adjust $250k of back to 1993, its closer to $400k. Keep that in mind.

Next, if you have ever bought a used car, a Turkish rug, or engaged in any form of haggling, you know that you NEVER start with the actual number where you want to end up.

Instead, you use a number that is your opening gambit. It’s a bid, a feint, a frame to the negotiations. Its where we start, not where we will end up. In terms of the top bracket, I doubt it will be either $250k or $1m.

With $500k, everyone gets a little something to take back to their supporters and declare victory.

The GOP gets to say the held the line on taxes for 95+% of the country, the Dems get to say they finally made the wealthy pay their share, and all the politicians are happy.

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My guess is the top bracket settles out at about $500,000 – What say ye?


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