Not Joe the Plumber, but SAHM

iVillage Member
Registered: 10-16-2008
Not Joe the Plumber, but SAHM
246
Thu, 10-16-2008 - 10:49am

My Open Letter:

Dear Senator Obama,

I am a stay-at-home mom living in the over $250k tax bracket. I want to ask you why you feel my family is not doing it's part to share the wealth in this country. Our family does well but we also pay taxes at the highest marginal rate. We do not have millions or the kind of lifestyle that would get us access to tax loopholes. We only get deductions for home mortgage interests, state taxes paid and charitable contributions. Last year those three deductions were capped because the government limits the deductions at our income level. In the past we have been stuck in AMT which ensures we do not underpay our fair share of taxes.

Because of our family's income level, our children will not qualify for student loans or other aid. Therefore we must save entirely for their college. We save as much as we can. In recent weeks lost 30% of those savings as well as a decent amount of our retirement savings and the few mutual fund investments we have are under water. The only other asset we have is our family home. We only have one. It would be really tough to sell it in this market, we've lost a large chunk of our equity.

We have never received a stimulus check, yet we do our part to donate to charities we believe in, invest in the market and spend to keep the economy going. And we pay our taxes. There is no question that the opportunities in this great country have allowed us to achieve the American Dream. For that I am grateful.

Your proposals will take an additional 12% out of our annual family budget by increasing the marginal tax rate and increasing payroll taxes. We aren't struggling yet but we will be if your tax proposals pass. We will have to stop or severely limit college savings, with one child only 3.5 years from college and the savings down 30%. Last year we paid enough in Federal Taxes to supply 240 individuals with a Bush stimulus check, similar to the stimulus plan you propose if you are elected (I guess that continuation of the same Bush economic polices is good). I have no doubt that some of what we paid went to wasteful government projects and earmark spending that did not help any struggling families. You say $18 billion in earmarks is not a lot of money to you but 12% of my family budget is a lot to me and my children. I do not begrudge what we already give the government, but I will argue that we are doing our share. I argue we are patriotic and we are neighborly.

We are upper middle class, we are not like your friends, Oprah and Warren Buffet. Our priorities are saving for our retirement, our kids college and paying off our house. We can comfortably do those three things now, though we are worried about the economy like everyone else.

I am a registered Democrat and have always believed in social programs for those who need them. I still believe in them. But I do not understand why when you speak that it sounds as though my family is getting something over on this country. That we aren't doing our part. That we don't pay enough tax. That we don't do enough to lift others up. I say we are doing a lot by not asking anything from the government. I say it is the government that is letting the American people down, not us.

If this economy gets worse my husbands job will be at risk. We could lose our home along with the remainder of our savings. The only good news I see coming from the Democrats is that maybe then we can have the government contribute to our children's college education, we'll get a tax cut and might finally see one of those stimulus checks. Then you'd finally get your chance to lift my family up.

Pennsylvania Mom
http://openlettertobarack.blogspot.com/

Pennsylvania Mom http://openlettertobarack.blogspot.com/

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iVillage Member
Registered: 10-15-2008
Mon, 10-20-2008 - 2:58pm
From what I have been able to calculate from the McCain plan...I would not benefit much from it at all. My family would end up paying more taxes and pay an extra 200 dollars a month in health care costs. That is assuming that my DH's employer continues to offer group health care. If they opt out of group health care coverage under the McCain plan...we would no longer be able to afford health care coverage. Our plan as it is costs 12,892 dollars a year...so with the 5k plan we would end up owing over 7k per year. We would end up paying more per month with his plan..and we simply can't afford it. I wouldn't know if I would get a return at the end of the year anymore under the McCain plan or not....regardless....we woulnd't be better off so far as health care is concerned from what I know of the plan. I would like to stick with the reputable heath care company I have....rather than being left without heath care due to costs.
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iVillage Member
Registered: 07-16-2008
Mon, 10-20-2008 - 3:34pm

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Served their coffee, cleaned the toilets in the office building where they work, took care of their children at daycare, bagged their groceries, stuff like that.


They receive a paycheck for that.

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iVillage Member
Registered: 04-24-2008
Mon, 10-20-2008 - 3:45pm

I just looked up tax credits, and McCain's tax credit does not go directly to the insurance carrier.

iVillage Member
Registered: 04-24-2008
Mon, 10-20-2008 - 3:49pm
Right now, I think that threshold for paying medical expenses and premiums out-of-pocket is fairly high.
iVillage Member
Registered: 10-10-2007
Mon, 10-20-2008 - 6:50pm

Is there a difference between buying insurance for a large family or a small family? It is my understanding that there are three rates: single people; couples; and family. That's it. My dad kept me on his insurance as long as possible, because it made no difference to him if I was on it or not, since he was covering my mom and my siblings. So it

iVillage Member
Registered: 10-16-2008
Mon, 10-20-2008 - 6:53pm

But why would your dh's employer dump the plan? Was he not already motivated to provide this benefit to employees? How much of the $13k do you pay vs. the employer paying? The tax on the $13k is $3k (if you are 25% tax bracket). So between you and the employer already paying $13k, now you will get charged $2k per year LESS because the government is putting in a $5k credit and charging you $3k tax (net $2k benefit). Your employer decides how much of the plan you pay, they adjust your portion of the premium so you get the savings, or so at a minimum you don't pay any more than you pay now.

We can't really compare that to Obama's plan though, you would either keep what you have now paying what you are paying now or you'd be able to buy it at some cost that is currently unknown.

Pennsylvania Mom http://openlettertobarack.blogspot.com/
iVillage Member
Registered: 10-10-2007
Mon, 10-20-2008 - 6:57pm

What do you mean by that?


1. Social Security money isn't invested. That's why it's unsustainable in the long run. If they were getting a return on our dollars, they wouldn't have a problem.


2. Social Security isn't tied to a particular employer. You can work 1,000 jobs and have the same benefit...


iVillage Member
Registered: 10-16-2008
Mon, 10-20-2008 - 7:02pm

You have to look at it two ways - the people who get health insurance through their employer and those who don't. His plan affects each group a little differently, IMHO both for the better but the currently uninsured benefit more under his plan.

>>>>To simplify, if you owe only $5,000 in taxes for the year 2008, then on April 15, 2009 - you don't have to pay any taxes. But around that time you'd have to pay $12,000 out of pocket for your 2009 insurance premium ~ money you don't yet have because your $5,000 tax credit for the year 2009 has not yet accrued.<<<<

Ok, so today if you are currently uninsured you are paying that premium all year long with no tax credit at the end. So you are $5k better off under McCain's plan, getting it on April 15th is better than not getting it at all.

>>>>Plus, if you get health insurance thru an employer, you don't have to pay the part of the premium the employer pays. So employees pay some of the premium each month, but the employer does pick up a bit. Not so under McCain's opting-out/shop-around plan.<<<<<

If you get it through your employer you keep your same plan but you get taxed and get a credit. If you are in the 25% tax bracket and your employer benefit is $12k, you get taxed $3k but get a $5k credit to offset it (assuming you are right about the credit not going to the insurance company). You are $2k better off. If you are in the 35% tax bracket tax is $4,200 so you are only $800 better off. If you are in the 15% tax bracket the tax is $1,800 so you are $3,200 better off.

These factors would change depending on how much your employee benefit was, but most employees have to pay SOME portion of their health insurance premium, and the "benefit" that gets taxed is only the employer paid portion.

Pennsylvania Mom http://openlettertobarack.blogspot.com/
iVillage Member
Registered: 04-09-2006
Mon, 10-20-2008 - 7:04pm

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Just to clarify, it looks like this means that the 35% of people who don't pay income taxes at all will NOT be able to use this tax credit. Is this correct?

My husband and I were covered by employer sponsored health plans (costing us about $6000 per year) for many years before we actually needed health coverage. Mr. McCain wants to destroy that sort of insurance, leaving those of us with "preexisting conditions" to duke it out with the health insurance companies on our own. Thanks, but no thanks.

iVillage Member
Registered: 10-10-2007
Mon, 10-20-2008 - 7:05pm
you don't get a deduction, but, if you get insurance through your employer, you get to pay your premiums with pre-tax dollars. if you look on your paystub, it'll reflect that. on mine, there's an asterix next to everything that is not counted as taxable wage, meaning, i get to use pre-tax dollars for that (as in, they take my gross earnings, take out the cost of the medical plan, then use the new number as my taxable income).

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