PrintNovember 7, 2009
The return of the inflation tax
Buried in the Pelosi Healthcare bill is a very dangerous tax feature: repeal of indexing of progressive tax rates for inflation. Via the Wall Street Journal:
"Buried in Nancy Pelosi's health-care bill is a provision that will partially repeal tax indexing for inflation, meaning that as their earnings rise over a lifetime these youngsters can look forward to paying higher rates even if their income gains aren't real.[....]"In order to raise enough money to make their plan look like it won't add to the deficit, House Democrats have deliberately not indexed two main tax features of their plan: the $500,000 threshold for the 5.4-percentage-point income tax surcharge; and the payroll level at which small businesses must pay a new 8% tax penalty for not offering health insurance."
The Pelosi tax surcharge applies to capital gains and dividends.
Given the risk of hyperinflation due to the reckless printing of money to fund Obama's record deficits, a huge and unexpected tax increase faces Americans who will suddenly fuind themselves called "rich" even as their incomes buy less and less.
Hat tip: John Ferry
