Re: Why I Pay Too Much in Taxes

[Black Unicorn <unicorn@schloss.li>]

On Tue, 7 May 1996, Timothy C. May wrote:

> At 1:17 PM 5/7/96, Clay Olbon II wrote:
> >At 5:34 PM 5/6/96, Timothy C. May wrote:
> >>Also, the effect of inflation has been to inflate salaries and thus inflate
> >>people into higher tax brackets, even when their "real wages" have not gone
> >>up.
> >
> >This used to be true.  A bill passed during the Reagan administration
> >indexed the brackets to inflation to remedy this situation.  I don't know
> >how succesful the bill was in eliminating "bracket creep", but that was the
> >stated purpose.
> 
> No, it _still_ is true. One bill during one administration does not a major
> change make.

I'm not sure I understand what you mean.  I sent the text of the law to
the list.  The position that you take (that increse in inflation can send
you into the next tax bracket) is incorrect.

> Look at the actual rates, average salaries, increases, etc.
> 
> (Sure, there have been all sorts of rate increases, decreases, changes,
> loopholes added, loopholes subtracted, etc. But the fact is that the
> average starting salary for an EE was about $12,000 a year in 1975 and more
> than 30,000 in 1995, with about the same buying power but with tax _rates_
> dramatically higher.)

The bill took effect in 1993. (1992?)

Rates will not change with respect to inflation (to the extent that
inflation is accurately measured by the CPI).

I believe an exception was made for the top bracket in 1994, but I don't
recall how it was implemented.

> --Tim May

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