4 ms·

but you're still earning more than if you haven't gotten that 5% raise.

deleted 5y ago
[deleted]
jtbayly 5y ago
And you’ll still be surprised that even though you’re in a higher tax bracket, your standard of living actually went down.
- fragmede 5y ago
  That's not how the progressive tax system in America works.
  - jtbayly 5y ago
    It is when inflation is high, which is exactly what we are talking about.
    - deleted 5y ago
      [deleted]
DSMan195276 5y ago
I think his point is that while a 5% raise and 5% inflation should be a wash, since you now pay slightly more taxes than before your pay after taxes is slightly less value than before. It's still very misleading to say "wage gains aren't good" though - the problem is not that you got a 5% raise, it's that inflation is 5% so you need a slightly-higher-than-inflation raise to keep up. If you didn't get a 5% raise you'd just be even worse off.
- iso1631 5y ago
  Presumably the tax brackets are linked to inflation too
  - jtbayly 5y ago
    Pretty sure they're not.
    - iso1631 5y ago
      US tax brackets seem to be https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2021 https://www.irs.gov/newsroom/irs-provides-tax-inflation-adju...
      - jtbayly 5y ago
        That shows nothing about the amount of the adjustment. Looking up last year's and running a few calculations, it appears to have been adjusted 1%! That's not adjusting for inflation. Not sure what it's adjusting for, but not inflation.
        iso1631 5y ago
        Headline literally says IRS provides tax inflation adjustments And links to https://www.irs.gov/pub/irs-drop/rp-20-45.pdf https://www.irs.gov/pub/irs-drop/rp-20-45.pdf "This revenue procedure sets forth inflation-adjusted items for 2021 for various provisions of the Internal Revenue Code of 1986 (Code)" It's states adjusting for inflation for the tax year beginning March 2021. The document came out in October 2020 when inflation was 1.2%, I'm not sure when they adjust it and you may disagree with the measure of inflation The year before was November 2019 https://www.irs.gov/pub/irs-drop/rp-19-44.pdf https://www.irs.gov/pub/irs-drop/rp-19-44.pdf Here's the one for 2021/2 (Nov 29th 2021) https://www.irs.gov/irb/2021-48_IRB https://www.irs.gov/irb/2021-48_IRB Married Individuals Filing Joint Returns, lowest and highest bands: Thresholds for tax year 2021/2 goes from 19750 to 19900 (0.7%) at one end, and from 622050 to 628300 at the other (1%) Thresholds for tax year 2022/3 goes from 19900 to 20550 (3.27%) at one end, and from 628300 to 647850 at the other (3.11%)
- ahthat 5y ago
  It’s too far to say that “”wage gains aren’t good”, but he makes a good point about wage increase, inflation, and tax brackets I hadn’t thought of before
  - DSMan195276 5y ago
    I think it's a bit overblown personally, the percentage of tax you pay is not going to increase a notable amount even with 5% inflation and a 5% raise. The brackets also get adjusted every year, to account for his point.

deleted 5y ago

[deleted]

And you’ll still be surprised that even though you’re in a higher tax bracket, your standard of living actually went down.

fragmede 5y ago
That's not how the progressive tax system in America works.
- jtbayly 5y ago
  It is when inflation is high, which is exactly what we are talking about.
  - deleted 5y ago
    [deleted]

DSMan195276 5y ago

I think his point is that while a 5% raise and 5% inflation should be a wash, since you now pay slightly more taxes than before your pay after taxes is slightly less value than before. It's still very misleading to say "wage gains aren't good" though - the problem is not that you got a 5% raise, it's that inflation is 5% so you need a slightly-higher-than-inflation raise to keep up. If you didn't get a 5% raise you'd just be even worse off.

iso1631 5y ago
Presumably the tax brackets are linked to inflation too
- jtbayly 5y ago
  Pretty sure they're not.
  - iso1631 5y ago
    US tax brackets seem to be https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2021 https://www.irs.gov/newsroom/irs-provides-tax-inflation-adju...
    - jtbayly 5y ago
      That shows nothing about the amount of the adjustment. Looking up last year's and running a few calculations, it appears to have been adjusted 1%! That's not adjusting for inflation. Not sure what it's adjusting for, but not inflation.
      - iso1631 5y ago
        Headline literally says IRS provides tax inflation adjustments And links to https://www.irs.gov/pub/irs-drop/rp-20-45.pdf https://www.irs.gov/pub/irs-drop/rp-20-45.pdf "This revenue procedure sets forth inflation-adjusted items for 2021 for various provisions of the Internal Revenue Code of 1986 (Code)" It's states adjusting for inflation for the tax year beginning March 2021. The document came out in October 2020 when inflation was 1.2%, I'm not sure when they adjust it and you may disagree with the measure of inflation The year before was November 2019 https://www.irs.gov/pub/irs-drop/rp-19-44.pdf https://www.irs.gov/pub/irs-drop/rp-19-44.pdf Here's the one for 2021/2 (Nov 29th 2021) https://www.irs.gov/irb/2021-48_IRB https://www.irs.gov/irb/2021-48_IRB Married Individuals Filing Joint Returns, lowest and highest bands: Thresholds for tax year 2021/2 goes from 19750 to 19900 (0.7%) at one end, and from 622050 to 628300 at the other (1%) Thresholds for tax year 2022/3 goes from 19900 to 20550 (3.27%) at one end, and from 628300 to 647850 at the other (3.11%)
ahthat 5y ago
It’s too far to say that “”wage gains aren’t good”, but he makes a good point about wage increase, inflation, and tax brackets I hadn’t thought of before
- DSMan195276 5y ago
  I think it's a bit overblown personally, the percentage of tax you pay is not going to increase a notable amount even with 5% inflation and a 5% raise. The brackets also get adjusted every year, to account for his point.