Posted on 12/27/2019 6:44:16 AM PST by karpov
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For years Congress has had the Internal Revenue Service adjust tax brackets and other provisions for inflation. (Revisions for 2020 are in the accompanying tables, and now is a good time to review them.)
But it’s equally important to remember key tax numbers that aren’t changing for 2020—because Congress hasn’t indexed them for inflation. And while inflation has been low recently, it hasn’t gone away.
As a result, millions of Americans are paying more to Uncle Sam because there’s no indexing for a variety of tax provisions, including homeowner benefits, tax thresholds on Social Security and investment benchmarks among others. The 2017 tax overhaul added more to this list.
The lack of an inflation adjustment is often intentional, says Len Burman, a tax economist who is a professor at Syracuse University and co-founder of the Tax Policy Center.
“A provision with a fixed-dollar limit is a good way for policy makers to phase in a tax increase slowly,” he says.
Consider tax benefits for homeowners over the past three decades. Once, home buyers could deduct the interest on any amount of mortgage debt. In 1987, Congress limited this break to deductions on up to $1 million of debt used to buy up to two homes, unindexed for inflation. If this limit had been adjusted, it would have been more than $2 million by 2017’s tax overhaul.
Instead of adjusting the $1 million limit upward, the overhaul pared it to $750,000, again unindexed for inflation. Lawmakers also capped write-offs for state and local property and income or sales taxes, or SALT, at $10,000 per return, with no inflation adjustment. A popular exemption of up to $500,000 per married couple of profit on the sale of a house ($250,000 for single filers) enacted in 1997 also isn’t adjusted for inflation.
(Excerpt) Read more at wsj.com ...
The article later mentions that the income threshold for taxation of Social Security benefits has been $44,000 for married couples since 1994, and that it would be $77,000 today if adjusted for inflation. Taxing SS benefits of the elderly depending on income imposes a high marginal tax rate on older workers.
The Democrats are promising higher SS benefits across the board. I think raising and indexing the threshold for SS benefit taxation would encourage the able-bodied elderly to work and make more sense.
The problem is slimebag businesses who would rather hire foreigners.
Taxing SS is just outrages. Both parties are to blame but Clinton especially. It was a tax on your income you whole working life and then they tax the “benefit”. It’s bad enough we have Marxist inspired graduated income tax tables but when you don’t adjust them to inflation that is especially bad. Which reminds me anyone know if that insidious Cadillac health insurance tax under Obama care still there? It was purposely not indexed for inflation so eventually anyone with decent coverage would be paying it.
Plus they’ve rigged the official inflation numbers.
Trump signs bill repealing ACA Cadillac tax, granting ‘relief’ for employers
> The problem is slimebag businesses who would rather hire foreigners.
Actually the problem is government that over-regulates almost all industries, and selectively declines to enforce some regulations such as those prohibiting hiring of illegal immigrants. That plus laws such as H1-B which encourages immigration at the expense of older workers.
All of that puts small businesses in a bind since all of their competition is likely to be hiring younger foreigners and laying off older natives.
Young illegal immigrants are also probably less likely to sue their employers in nuisance employee-employer lawsuits, another cost of doing business.
I prefer to view it as the multinational corporate teardown of the leading successful example of a nationalist government with protectionist policies Not at all exclusive to your view btw.
Yes. So incredibly rotten. I first paid it at age 18 and retied at age 72. At which point they tell me "Oh, and we want even more of your money now that you're getting a benefit."
I realize my money was all spent each year from age 18 onward and new money has to be found for me to get my benefit in 2019. I know.
I still remember watching the TV address by Lyndon B. Johnson saying (his eyebrows upward to look innocent) "This isn't a new tax. It is a tax on your tax." ( Which meant: A tax surcharge to pay for cost overruns in the Viet Nam war.)
(thumbs up. never thought of it that way.)
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