If the Bush tax cuts hadn’t been extended and the president hadn’t chosen to employ those tax breaks he despises so much, Pres. Obama could’ve paid $103,067 more in taxes than he actually did for 2011. And, with the help of a government website, he could still pay it, anyway.
The White House reported today that the Obamas has adjusted gross income (AGI) of $789,674 in 2011, on which they paid $162,074 in federal taxes. That works out to a tax rate of 20.5% of AGI.
Without using any type of credits to reduce the taxes paid on their AGI, at the current rate, that would make the Obamas’ tax liability $246,257:
$102,574 + 35.0% of anything over 379,150:
$789,674 - $379,150 = $410,524
$410,524 X 35% = $143,683
$143,683 + $102,574 = $246,257
But, the Obamas actually paid $162,074. If they’d paid the full amount, they’d have paid $84,183:
$246,257 - $162,074 = $84,183 more in tax
And, if the Bush tax cuts hadn’t been extended, the Obamas could’ve paid $103,067 more (without taking credits).
The base tax rate on their tax bracket would have increased from 35% to 39.6%, thus:
$789,674 - $379,150 = $410,524 X 39.6% = $162,567
$162,567 + $102,574 = $265,141
$265,141 - $162,074 = $103,067 more in taxes, had Bush tax cuts expired
But, it’s not too late for the Obamas to make up that $103,067, if they feel they feel people like them are under-taxed and unfairly taking advantage of tax breaks.
And, yes, the form even allows the Obamas to put it on a credit card – which could come in handy given the president’s apparent disposition to running up debt.
Editor's Note: As ObliviousInvestor explains (emphasis added), tax credit reduce you tax, not your adjusted taxable income:
"Many taxpayers are confused as to the difference between exemptions, deductions, and credits. Essentially, the difference is that deductions and exemptions both reduce your taxable income, while credits reduce your tax."
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