My take: The $100,000 tax bracket and high tax rates for working families

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Good evening,

Natural fact is. I can’t pay my taxes – Marvin Gaye, Inner City Blues

That song comes to mind around tax time and when new proposals surface.

Od late, I have received a couple of comments opposing proposed legislation that would bump up state taxes paid by those making $100,000 a year by a couple of tenths of one percent.

It’s safe to assume that our readership is unhappy with the 100K bracket since six-figure incomes are commonplace.

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The higher bracket does not address the fundamental issue of the top 6.7% income tax bracket starting at $60,000. That figure has never been adjusted to reflect the effects of income growth. The result is one of the nation’s higher state income tax rates.

Even with many family incomes growing only slightly over the years, that top tax rate should income figure should have been adjusted upward. It is worth noting that legislation to increase the standard deduction has been introduced, a move that would provide a little relief.

Unfortunately, during decades of Democratic control of the General Assembly and governor’s office, the previous practice of cutting the top income tax rate by a tenth or two of a percentage point during good times was abandoned. A couple of recessions doomed did not help.

Legislators and governors will argue that Delaware has little choice since it has no income stream from the sales tax, and corporate fee revenues can vary. The current flawed formula that rewards wealthier school districts and leaves poor counterparts starved for funds keeps property taxes low by regional and even national standards. Also, a budget crunch may be in the offing with the end of the pandemic funds and a likely recession.

Republicans and moderate Democrats looking for an issue that might resonate with Delaware residents, could propose increasing that $60,000 income figure and deep-six the futile effort to halt the gross receipts tax on businesses (the state is too blue to go along with that). Instead, they could come up with a change in income levels or tax brackets that provides more relief for middle-income working families. – Doug Rainey, chief content officer.

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