Obama's Financial Lake Wobegon (Of Sorts)

If this becomes policy, I predict a substantial increase in the amount of tax returns that claim Adjusted Gross Income of $249,999 or slightly less. A huge chunk of America's payroll flows through LLCs and S corps, who bear the full 12+% of Social Security taxes via the self-employment tax. Trust me, if you are in the ballpark of Obama's $250,000 threshold, it is not too hard to make a few thousand dollars vanish from the pass-through income. Let's say you're on track to haul in $260,000 in AGI, which means you'd owe an extra $19,500 in SE tax; many folks will find a way to magically convert $11,000 of income into 'business' expenses. That ski trip you took the family on...business trip. Your daughter's new laptop for college, um, it's for the business. (Of course, I don't endorse this sort of thing, after all, there are plenty of legal ways to shelter income.) It'll be a financial Lake Wobegon of sorts - not where everybody is above average but where large numbers of tax return filers' AGIs cluster roughly around $249,000.