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Dear Jerry,
Would you explain the "bracket creep" as it relates to the tax code?
Thanks,
NR
Dear NR,
Before Ronald Reagan eliminated bracket creep, the cut-off points for moving from one tax bracket to another were fixed and didn't change with the overall change in the cost of living. Therefore if you would reach the top tax bracket by making $50,000 a year say in the 1930s when that was a very high income level, you would still be raised to the top tax paying level for hitting 50 in the 1970s when it was upper-middle class. This meant that inflation caused automatic tax increases for the middle class, which made inflation even more damaging than it already was.
Regards,
Jerry
Would you explain the "bracket creep" as it relates to the tax code?
Thanks,
NR
Dear NR,
Before Ronald Reagan eliminated bracket creep, the cut-off points for moving from one tax bracket to another were fixed and didn't change with the overall change in the cost of living. Therefore if you would reach the top tax bracket by making $50,000 a year say in the 1930s when that was a very high income level, you would still be raised to the top tax paying level for hitting 50 in the 1970s when it was upper-middle class. This meant that inflation caused automatic tax increases for the middle class, which made inflation even more damaging than it already was.
Regards,
Jerry
