Word: brackets
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Dates: during 1980-1989
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...effects. "When inflation gets into double digits, you have to do something or else lose the race," says George Sullivan, an IBM executive in Denver, who has switched most of his cash from a bank to a money-market fund. Assuming 10% inflation, someone in the 50% tax bracket would now have to get 20% interest on his savings just to break even...
...yielding 9½% at a time when new ones are about 16% has a market value of only $67,000. The person who bought the old mortgage would be permitted to use the $33,000 difference to reduce his taxable income, which could put him in a lower tax bracket. One drawback is that since there is at least $100 billion worth of such mortgages outstanding, this plan could cost the Government up to $15 billion in lost tax revenues...
...They see the proposal as inflationary, a feeling that is strengthened by the year's strong first quarter. But the board still agreed that some tax cuts are necessary. Harvard's Feldstein pointed out that the Administration's proposed cuts would do little more than offset "bracket creep," which has pushed people into higher tax categories even though their real incomes after inflation have not risen. Feldstein predicted that there is likely to be pressure for "real tax cuts" later on, after Americans realize that they are no further ahead in buying power...
Pechman warned that the Reagan tax cut program in fiscal 1984 would take away $150 billion in revenues from the Government, leaving no room for savings incentives or such other popular proposals as elimination of the marriage penalty, lowering the top tax bracket from 70% to 50% on unearned income and raising the standard tax deduction. Pechman predicted that the bill finally emerging from Congress would be a mix of those features plus a much smaller cut in personal income tax rates...
Social Security taxes have already risen 34% since 1979 and will increase 49% more in the next three years. Meanwhile, taxpayers are being hurt by so-called bracket creep, which keeps pushing them into higher tax categories as their inflation-bloated paychecks increase. Without a reduction in those rates, millions may soon find themselves paying the top 50% rate, which was originally intended for only the nation's wealthiest taxpayers. Congressional leaders and the Administration need to find a plan that will both lessen the tax burden and improve the climate for savings in the U.S. - By Christopher Byron...