4 ms·

How does IRS win here?

cjbgkagh 4y ago
I assume capital gains on the increase in nominal value. The government gets a cut of that. Kinda acts like a wealth tax.
Mountain_Skies 4y ago
Unless the tax brackets are adjusted, inflation with rising wages means more people in higher tax brackets. If corporate earnings go up, there's more for the IRS too though that might be wiped out by the lessening value of each dollar.
- whimsicalism 4y ago
  Unless the tax brackets which are adjusted for inflation every year continue to be adjusted as usual*
- lpasselin 4y ago
  Are you saying the IRS does not adjust tax brackets to follow inflation properly?
- xxpor 4y ago
  The brackets are indexed to C-CPI as of 2018
- JumpCrisscross 4y ago
  > unless the tax brackets are adjusted Most IRS brackets and thresholds are tax adjusted [1][2]. Tax brackets certainly are, as is the personal standard deduction. [1] https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2022 https://www.irs.gov/newsroom/irs-provides-tax-inflation-adju... [2] https://thehill.com/policy/finance/580961-irs-announces-inflation-adjustments-for-standard-deduction-tax-brackets/ https://thehill.com/policy/finance/580961-irs-announces-infl...
bojangleslover 4y ago
Inflation is 8.6% but they adjusted the tax brackets by 3%. https://taxdude.substack.com/p/inflation-is-a-double-stealth-tax?utm_source=%2Fprofile%2F90803141-tax-dude&utm_medium=reader2&s=r https://taxdude.substack.com/p/inflation-is-a-double-stealth...
- staticman2 4y ago
  You linked to someone who doesn't explain how they do the adjustment calculation. I'm assuming because the person at that substack is a bad faith actor trying to get an emotional response from people. Here's a link actually explaining the process. https://taxfoundation.org/2021-tax-brackets https://taxfoundation.org/2021-tax-brackets. It would appear the year over year cutoff for the calculation will lead to a bigger catch up in the next adjustment.
AnimalMuppet 4y ago
Let's say inflation is 10%. Let's say I have some money. To just break even, I have to invest it somewhere that returns 10%. So I do. (That's easier to find than it was when inflation was 1.5%.) Then the IRS says that the 10% is income, and taxes me on that. They make more than they did when I was getting 1.5% on my money.

I assume capital gains on the increase in nominal value. The government gets a cut of that. Kinda acts like a wealth tax.

Mountain_Skies 4y ago

Unless the tax brackets are adjusted, inflation with rising wages means more people in higher tax brackets. If corporate earnings go up, there's more for the IRS too though that might be wiped out by the lessening value of each dollar.

whimsicalism 4y ago
Unless the tax brackets which are adjusted for inflation every year continue to be adjusted as usual*
lpasselin 4y ago
Are you saying the IRS does not adjust tax brackets to follow inflation properly?
xxpor 4y ago
The brackets are indexed to C-CPI as of 2018
JumpCrisscross 4y ago
> unless the tax brackets are adjusted Most IRS brackets and thresholds are tax adjusted [1][2]. Tax brackets certainly are, as is the personal standard deduction. [1] https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2022 https://www.irs.gov/newsroom/irs-provides-tax-inflation-adju... [2] https://thehill.com/policy/finance/580961-irs-announces-inflation-adjustments-for-standard-deduction-tax-brackets/ https://thehill.com/policy/finance/580961-irs-announces-infl...

bojangleslover 4y ago

Inflation is 8.6% but they adjusted the tax brackets by 3%. https://taxdude.substack.com/p/inflation-is-a-double-stealth-tax?utm_source=%2Fprofile%2F90803141-tax-dude&utm_medium=reader2&s=r https://taxdude.substack.com/p/inflation-is-a-double-stealth...

staticman2 4y ago
You linked to someone who doesn't explain how they do the adjustment calculation. I'm assuming because the person at that substack is a bad faith actor trying to get an emotional response from people. Here's a link actually explaining the process. https://taxfoundation.org/2021-tax-brackets https://taxfoundation.org/2021-tax-brackets. It would appear the year over year cutoff for the calculation will lead to a bigger catch up in the next adjustment.

AnimalMuppet 4y ago

Let's say inflation is 10%. Let's say I have some money. To just break even, I have to invest it somewhere that returns 10%. So I do. (That's easier to find than it was when inflation was 1.5%.) Then the IRS says that the 10% is income, and taxes me on that. They make more than they did when I was getting 1.5% on my money.