Paul Ryan Haz Mad Math Skilz Sez

…da WaPo.

Oh, yesh, it duz!

A rare Geppetto for Paul Ryan’s assertion on Obama’s hidden top marginal tax rate

…Adding up all of these figures, you get to an effective marginal rate of nearly 45 percent. One can quibble with some of the assumptions, but tax experts we checked with found Ryan’s calculations to be reasonable.

Why are marginal rates important? In theory, if the rate gets too high, it reduces the incentive to earn another dollar. The top marginal rates have been as high as 90 percent in U.S. history, but it has also been as low at 28 percent (under Ronald Reagan). At 45 percent, that means nearly half of each additional dollar a high earner makes would go to taxes.

Put another way, Ryan shows that Obama’s budget would effectively boost the marginal rate for high earners by a hidden 7.5 percentage points, or an increase of 20 percent. For every $100,000 of additional income, about $45,000 would go to federal taxes. (State and local taxes would eat up more; there are no additional Social Security taxes at this income.)

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