The Bush tax cuts everyone would keepJuly 12, 2012: 12:45 PM ET
Washington is locked in a battle over what to do about the Bush tax cuts, which are set to expire at the end of the year.
Positions vary. Republicans want to extend all rates at current levels. Democrats want the rich to pay higher taxes -- which would likely be accomplished by raising rates for the top two income tax brackets.
It's worth remembering exactly what that means for the wealthy.
As New York Magazine points out, every dollar of income up to $250,000 -- no matter who earned it -- will be taxed at the same rate it is now.
Under the federal tax code, income earned within a certain bracket is taxed at a specific rate. The first few thousand dollars earned is taxed at 10%, for example. If additional income is earned, and the second bracket is breached, those dollars are taxed at a higher rate.
Since both Republicans and Democrats agree that the lower income tax brackets should not be changed, it's safe to say that everyone -- the rich included -- will continue to enjoy the current low rates on income earned up to at least $250,000.
The higher taxes will be paid only on income earned above $250,000. For example, the top tax rate might be moved from 35% to 39.6%, the same level it was at during the Clinton administration.