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Facts - Books - News    U.S. Facts Of Law:


Inflation And Income Tax Bracket

A certain amount of inflation is a necessity in a capitalistic economy.  The upside of a small amount of inflation is that it reduces the real amount of debt one owes, causes some investments such as real estate to increase in value and makes workers feel better because it helps their wages to increase over time.  The downside of inflation is that it can devastate the real value of savings and the real amount of income of those on fixed incomes such as retirees.

Another downside of inflation is that it causes wage earners incomes to creep into higher tax brackets.  Income tax rates are generally structured so that the more one makes the higher the tax bracket.  However, tax brackets are not adjusted for inflation and this causes wage earners more in taxes over time.

As an example, a worker making, say, $50.000 per year may find himself in a 20% tax bracket.  In several years, inflation may have increased the worker's cost of living by 20% or more, so he needs to be making $60,000 just to stay even.  The way Congress structures income tax brackets, they don't change over time for inflation.  So, the worker, by earning $10,000 more per year, may now be in the 25% tax bracket, yet his wages buys him no more than it did when he was making $50,000.  In effect, the government has increased the workers taxes just through inflation.

Congress knows inflation will push people into higher tax brackets over time and will cause increased tax rates on the median income.  That's one reason they like the the Federal Reserve to allow some inflation to exist in the economy and only reign in growth in the face of hyper inflation.

 

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Whataposs In The New Tax Bill Politico
Politico What39s in the new tax bill Politico Conference Agreement. The top tax rate would be set at 37 percent. The standard deduction would be doubled. The number of brackets and the income thresholds for each weren39t immediately available, nor was whether the individual provisions would expire The Republican tax bill that could actually become law, explainedVox 7 ways to make the tax bill betterConservative Review Does the House tax bill make more changes permanent than Senate bill doesPolitiFact Miami Herald Yahoo Finance The Hill all 2,240 news articles raquo

U.S. Core Inflation Slows, Puts Spotlight On 2018 Interest Rate Outlook Reuters
Reuters U.S. core inflation slows, puts spotlight on 2018 interest rate outlook Reuters Underlying U.S. consumer inflation slowed in November, held down by weak healthcare costs and the biggest drop in apparel prices in nearly two decades, which could impact the pace at which the Federal Reserve raises interest rates next year. US Core Inflation Slows, Puts Spotlight on 2018 Interest Rate OutlookU.S. News World Report How the Producer Price Index impacts tax cuts, need for economic growthCommunities Digital News Producer Price Indexes Bureau of Labor StatisticsBureau of Labor Statistics all 117 news articles raquo

Scotlandaposs Budget: What Does It Mean For Me BBC News
Sky News Scotland39s budget: what does it mean for me BBC News This isn39t just as simple as lower earners getting a tax cut, while the better off pay more. Because the higher rate threshold is rising by the rate of inflation, people earning 50,000 in Scotland will actually be 85 better off in 2018 19 than they Extra penny on income tax rate for Scots earning more than 24000Sky News Scottish jobless rise prompts calls for tax restraintThe Guardian Holyrood39s income tax hike plan to pay for public sector wage rises for 500000 workersThe Scottish Sun Energy Voice all 242 news articles raquo

How Do House, Senate Tax Bills Differ Cincinnati.com
Cincinnati.com How do House, Senate tax bills differ Cincinnati.com Tax reform has been in the news lately, and I39ve heard that both the House and Senate passed versions of the bill. How do they differ, and what39s next Tax reform will no doubt have a great impact on nearly every American taxpayer, so it39s important to 7 Take Aways From Senate39s Tax Cuts And Jobs ActForbes 7 Tax Terms to Know as Congress ConfersConsumerReports.org Is the GOP tax plan an unprecedented windfall for the wealthy We look at 50 years of data to find out.Washington Post NBCNews.com Lifehacker all 3,293 news articles raquo

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Facts of Law about consumer inflation

Facts of Law - Inflation