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Where in the world would raising taxes on a dime be perfectly acceptable? Imagine you have a rent or mortgage payment, but inflation hits 10% so your taxes go u

Where in the world would raising taxes on a dime be perfectly acceptable? Imagine you have a rent or mortgage payment, but inflation hits 10% so your taxes go up 10% month over month to counter it. Your costs were fixed, the inflation affected other things besides your long term agreements, and yet, you would default on your payments because you got 10% less that month after taxes. Who would not want to burn the whole system down after experiencing that?

vkou 5y ago
> Where in the world would raising taxes on a dime be perfectly acceptable? Any place where the no-taxes-ever party doesn't have a permanent stranglehold on at least one branch of a deadlocked government. The United States is an outlier in this. > Imagine you have a rent or mortgage payment, but inflation hits 10% so your taxes go up 10% month over month to counter it. If inflation is that high, the real cost of making your mortgage payment is shrinking in real dollars.
- chrisco255 5y ago
  > Where in the world would raising taxes on a dime be perfectly acceptable? "Any place where..." Noted that you couldn't conjure a single example. > If inflation is that high, the real cost of making your mortgage payment is shrinking in real dollars. This assumes that inflation is evenly distributed in all sectors. It isn't. Your CPI inflation rate is a proxy, a rough index, an average, and a dubious one at that prone to all sorts of bad signals. Tax rates are evenly distributed (even if a higher tax bracket results in a higher rate, it's still evenly applied across the population). Inflation isn't. Wages don't move in lockstep with inflation, particularly across all sectors and across all jobs. It moves in fits and bouts, and a raise may only come once a quarter or once a year for many (since businesses need their expenses to be predictable). This idea that taxes could be unpredictable based on some rough, government sponsored index of inflation is quite silly on deep inspection. It completely upends the predictability of doing business. And the cost of that unpredictability would be a contraction in the economy from less spending to hedge against the uncertainty of income.

vkou 5y ago

> Where in the world would raising taxes on a dime be perfectly acceptable? Any place where the no-taxes-ever party doesn't have a permanent stranglehold on at least one branch of a deadlocked government. The United States is an outlier in this. > Imagine you have a rent or mortgage payment, but inflation hits 10% so your taxes go up 10% month over month to counter it. If inflation is that high, the real cost of making your mortgage payment is shrinking in real dollars.

chrisco255 5y ago
> Where in the world would raising taxes on a dime be perfectly acceptable? "Any place where..." Noted that you couldn't conjure a single example. > If inflation is that high, the real cost of making your mortgage payment is shrinking in real dollars. This assumes that inflation is evenly distributed in all sectors. It isn't. Your CPI inflation rate is a proxy, a rough index, an average, and a dubious one at that prone to all sorts of bad signals. Tax rates are evenly distributed (even if a higher tax bracket results in a higher rate, it's still evenly applied across the population). Inflation isn't. Wages don't move in lockstep with inflation, particularly across all sectors and across all jobs. It moves in fits and bouts, and a raise may only come once a quarter or once a year for many (since businesses need their expenses to be predictable). This idea that taxes could be unpredictable based on some rough, government sponsored index of inflation is quite silly on deep inspection. It completely upends the predictability of doing business. And the cost of that unpredictability would be a contraction in the economy from less spending to hedge against the uncertainty of income.