Tax rates are going to be going up on all levels of the middle class

Tax rates are going to be going up on all levels of the middle class, without the government having to pass any new tax laws.

How can this be? The effects of inflation combined with tax income brackets.
Many taxpayers are going to be pushed up into higher tax brackets by inflation. Since the tax bracket threshold remains the same, but inflation pushes the income numbers higher, even though that income is not worth more.
Once in a higher bracket, they will be paying a higher percentage of their income.

No doubt the economic planners in the Biden Administration are counting on this to help increase tax revenues to help offset some of the massive government spending.

Of course this will be hitting the middle class the hardest. All different levels of the middle class, from the lower middle class to the upper middle class.

The government has been engaging in massive government deficit spending plans, and this is leading to inflation. (there are some who dispute that)


If, for example, you were earning $40,000 before, and there is 10% inflation, you will now be earning $44,000. Even though what you are earning is not worth more, your income (or some of it) has now been pushed into the 22% tax bracket.

 

There is no implication and/or guarantee that people's incomes rise the same as inflation rates. In fact, the problem usually arises because wages do not grow the same as inflation rates therefore purchasing power is less.

Tax brackets are not determined by people's gross income...it's based on their taxable income.

Finally, anytime people earn more they should expect to pay more taxes...

 

Time for a flat tax system...everyone pays the exact percentage...

 

10 percent sounds perfect. And the federal gov needs to live within the revenue generated. Cut the pork.

 

Tax brackets are adjusted for inflation annually.


Each year , the U.S. Internal Revenue Service (IRS) adjusts tax brackets for changes in the cost of living to calculate federal tax liability. Because the U.S. economy typically faces inflation each year , the IRS adjusts tax brackets upward.

https://www.investopedia.com/ask/answers/111715/are-tax-brackets-adjusted-inflation.asp


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The actual real inflation rate is going to be much higher than the official stated rate.
Just look at the official rate over the years and compare that to things like college education or home prices.

 

You're right.

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Not sure the correct percentage but whatever it is all so-called Americans can afford to pay it...

 

Why create another definition for inflation? It's calculated carefully based on certain items over certain periods of time. There are reasons why tuition and home prices are not included...

 

Sorry, this just comes off as incredibly disingenuous. (Not entirely sure what your actual intent here is)

I'm not going to get into a semantics argument with you here. You know what I mean.

 

Don't call it inflation when it's not inflation! There is a formula that is used and until it changes it's precisely how inflation is calculated. Playing games is disingenuous...

 

Since 1984, retirees have owed taxes on their benefits if half the amount they receive from Social Security plus their other income comes to more than $25,000 if they are single or $32,000 if they are married filing together.
Individuals who earn more than $34,000 and couples who earn more than $44,000 can be taxed on up to 85% of their benefits.​

Inflation may hit Social Security recipients twice | Fox Business, Megan Henney, July 18, 2022

The article discusses how even though these payments are supposedly adjusted for inflation, nevertheless retired people are going to be hit in two different ways from tax increases, as a result of the inflation.

 

I'm sure it effects only those making $400,000 a year. Biden promised.

 

Why? Why should people be taxed for contributing to society through their productive efforts rather than for taking from society through their privileges? The two most fundamental and firmly established principles of sound taxation policy are, "ability to pay" and "beneficiary pay." Income -- especially earned income -- is not a measure of either. Assets or net worth are by definition the only possible measures of ability to pay, and "beneficiary pay" would require those who enjoy government-issued and -enforced privileges like land titles, bank licenses and IP monopolies to repay what they are taking from society through those privileges.

 

Right: to deceive.

 

Percentage of what? And why should everyone pay the exact same percentage when some -- the privileged -- get a lot more benefit from government spending than others?

 

Great news? You can finally pay off the trillions that you owe.

 

You confuse inflation with wage increase. 10% wage increase would make more people happy than not. The rest of your post is equally uninformed, which is what often happens when you try to put a negative spin on everything.

 

You have a point.

It's the Right, nickel and dime-ing everybody but the rich.

 

Check http://www.shadowstats.com/alternate_data/inflation-charts

In the late 1970's a congressional commission examined the impact of the aging population on the govt and found social security, medicare, govt funded retirement, would 50 years down the road bankrupt the feds. They proposed a number of solutions one being to recalculate the CPI to be "more accurate".

The idea was that even if the CPI was lowered a tiny bit over 50 years it would compound to a significant "savings" in govt expenses. Military pay and retirement, social security, medicare, medicaid, civil service retirement and pay, and more are all tied to the CPI. Lower the CPI calculation and all those payments decrease.

The commission was under President Carter but the first real CPI mod was under Reagan with the intent of lowering the CPI. The second major mod was 1998. There have been constant mods since.

The CPI is now a constantly changing basket of items (each item is weighted based on consumer demand, geography, and subjective criteria). The CPI can be computed to be whatever the govt wants it to be but it has to somewhate believable, thats why it has gone up lately.

Does anybody honestly believe the CPI has been 2% all thes years?

http://www.shadowstats.com/alternate_data/inflation-charts
computes the CPI using the 1980 method (original) and a 1990 method and compares it to the official govt number.

 

Um.....no. You are confusing salary increase with inflation. If a 10% raise offends you, you can just tell your employer that you'd rather take a pay-cut rather than a raise.

 

Income is just one part of taxes. Property taxes from inflation will be going up 10X the amount your income taxes will be going up. Same goes for taxes you pay when you purchase food

 

You are basically arguing that there is nothing worse than increase in income and the value of your assets.

If your income was $20K and someone offered you $100K job, you would turn it down, because you'd have to pay more tax.

Pessimism is an illness.

 

Income increases like that sure but that’s not happening. What is happening is $1 or $2 raise not a 400% raise as you are suggesting. My raise was roughly 7.9%.

and property value going up is bad if you have no intent on ever moving.

 

So you got a near 8% raise and ......that's a bad thing......Why didn't you just turn it down?