We’re beginning to see a pattern here. Although the actual tax rate has not increased, many of of us will be paying more in taxes next year. Earlier this week, with the passage of the health care bill from the House, the Democrats managed to cram through another tax-hike-that-isn’t-a-tax-hike that directly targets middle- and lower-class Americans. How you ask? If the bill passes, the tax bracket you belong to will no longer adjust for inflation.
What’s that mean? If you make the same amount of money from one year to the next, your buying power actually slightly decreases due to inflation. Because of the way the economy works, goods gradually increase in price (actually, with our current monetary policy, there won’t be anything gradual about it, but I digress). If your pay does not increase to match the inflation rate, you are actually taking a 2-5% pay cut every year, because the same money buys less goods and services than it did the previous year.
To solve this problem, we get cost of living increases – again, usually in 2-5% increments. Tax brackets, to be fair, scale in a similar fashion. If you’re not as wealthy as you were last year, you shouldn’t be taxed as much.
House Democrats have, in their proposed health care bill, decided to stop adjusting tax brackets for inflation. This means that if you make the same amount of money this year as you did last year adjusted for inflation, you will eventually go up to the next tax bracket – which will increase your tax rate.
The kicker in all of this is that the wealthy can’t go up another tax bracket, but if you’re a lower- or middle-class guy, you have two options: pay a higher tax rate or slowly lag behind in earning power until you simply can’t pay your bills any more. There are 6 different tax brackets in the current tax code. People making $200,000 a year are already in the highest tax bracket – they can’t be pushed into a higher bracket by inflation.
You know who can be? Us little people.
If you’re single and you make 30k a year, you’re taxed at 15% before social security and medicare/aid and deductions. Five years from now, if you don’t accept a cost of living increase, you’ll be making the equivalent of about 27k a year a year. If you accept the cost of living increase, you will be in the next tax bracket, being charged 25% before medicare/aid and deductions.
If you’re counting (and like anyone who runs a good conservative blog, you know I am) Democrats have proposed or already passed bills that will increase your taxes by:
· Capping charitable donation deductions to 28%, reducing the amount of aid that can be distributed to low-income and jobless Americans.
· Taxing carbon, which is created mainly through vehicle emissions, industrial production, and energy creation, which will mainly tax people who have to commute to work, destroy low-skill jobs, and increase the cost of heating, air conditioning, and consumer electronics which punishes lower- and middle-class Americans.
· Giving us the option of either buying overpriced health insurance (whose price will skyrocket even further with this bill) or charging employers an 8% payroll tax and then force employees to either purchase said insurance or charge them a 2.5% surtax; a cost that will be passed on to employees and result in lower wages, more layoffs and – let’s face it – is a thinly disguised tax on every American making more than 20k a year.
· And now, by ratcheting up the tax rate for all Americans as inflation slowly drives them into new and higher tax brackets.
But, to be fair, taxes aren’t going up.
… seriously, how do you say that with a straight face?