Word: bracketeers
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...very top: 35.5% for families with incomes of less than $10,000 a year; 10.7% for those enjoying incomes of $200,000 or more. Families in the upper middle class would get the smallest cut, an average of little more than 4% in the $50,000-to-$200,000 bracket. In the lower groupings, while the cuts would be larger in percentage, many will be quite modest in dollar amount. The Treasury estimates the average reduction for all taxpayers earning $50,000 a year or less would be about $200 a year...
...these people use shelters" that will no longer be available under the reform plan, and thus will be paying tax at lower rates but on more of their income. Still, even though the amount of income subject to tax for people in the $200,000-and-up bracket will rise an average 18.5%, the effective tax rate on the total incomes of the rich will drop substantially...
...taxpayer, spouse and dependent would nearly double at the outset, to $2,000 from $1,040. In later years the exemptions would, as now, be "indexed" for inflation; that is, the exemption would rise each year by the same percentage that consumer prices go up. The so-called zero-bracket amount would be raised to $4,000 for couples filing joint returns, from $3,670 now. That is the amount of income, after personal exemptions, that is freed from tax. For people who do not itemize deductions, it is equivalent to the old standard deduction...
...combination of lower rates, a higher personal exemption and a higher zero-bracket amount would mean that nearly all individuals and families below or just above the poverty line would pay no federal income tax at all. In 1986, the poverty line for a family of four is expected to be $11,400. Under present law, if that family had one wage earner, it would pay tax on any income above $9,575. Under the Reagan plan, taxes would start only if its income exceeded $12,798. Another tax break would give a family with one working spouse the opportunity...
...while a deduction is only a reduction in taxable income. A credit of $1,000 reduces a family's tax bill by $1,000. A $1,000 deduction would lower taxes by $150, $250 or $350, depending on whether a family was in the 15%, 25% or 35% tax bracket. Barbara Kennelly, a Democratic Congresswoman from Connecticut, objected that though Reagan billed his reforms as "pro-family," the child-care, IRA and other provisions seemed tilted toward just one kind of family: the classic one in which only the husband works and the wife stays home and takes care...