Re: Why I Pay Too Much in Taxes

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.

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.)

--Tim May

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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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