In order to raise enough money to make their plan look like it won't add to the deficit, House Democrats have deliberately not indexed two main tax features of their plan: the $500,000 threshold for the 5.4-percentage-point income tax surcharge; and the payroll level at which small businesses must pay a new 8% tax penalty for not offering health insurance.
This is a sneaky way for politicians to pry more money out of workers every year without having to legislate tax increases. The negative effects of failing to index compound over time, yielding a revenue windfall for government as the years go on. The House tax surcharge is estimated to raise $460.5 billion over 10 years, but only $30.9 billion in 2011, rising to $68.4 billion in 2019, according to the Joint Tax Committee.
Americans of a certain age have seen this movie before...
I also recall some yak-yak from Our Puffery in Chief about only raising taxes on the rich. Being of a certain age, I remember the much less radical Bill Clinton making that same promise, and my subsequent annoyance at discovering that despite having a middle-class income at best we were somehow among "the rich."
History doesn't repeat itself, but it does play encores for the short-of-memory.
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