The Tax Law's New Way Of Measuring Inflation Could Take A Toll On Taxpayers

[RoosGirl]

A little-remarked-upon provision changing the way inflation is calculated is among the big changes contained in the tax overhaul signed by President Trump last week.

The new method, using the so-called "chained" consumer price index to determine when to adjust tax brackets and eligibility for deductions, is expected to push more Americans into higher tax brackets more quickly. In the past, the tax code used the traditional CPI measure issued by the Labor Department each month.

By switching to this new method, the government will bring an additional $134 billion into federal coffers over the next decade, according to the Joint Committee on Taxation.

Continued - https://www.npr.org/2017/12/27/573556101/taxpayers-may-feel-a-bite-from-a-new-way-of-tracking-inflation

[Oceander]

In other words, a sneaky stealth tax increase!

[RoosGirl]

In other words, a sneaky stealth tax increase!

I was beginning to think you had me on ignore.

[Oceander]

There are other sneaky tax increases as well, particularly for small businesses.  For example, NOLs can no longer be carrried back, only forward, and can only be used to offset up to 80% of business income, which means that no matter how bad your losses were, you’ll still be paying taxes.  That will be particularly on businesses that are high volume but small margin (i.e., high gross revenue but low net income). 

[InHeavenThereIsNoBeer]

I was beginning to think you had me on ignore.

Curiously, you can't put yourself on ignore.

Or perhaps I should say that I can't put myself on ignore.

[RoosGirl]

Curiously, you can't put yourself on ignore.

Or perhaps I should say that I can't put myself on ignore.

"I give myself very good advice, but I very seldom follow it." - Lewis Carroll

[RoosGirl]

There are other sneaky tax increases as well, particularly for small businesses.  For example, NOLs can no longer be carrried back, only forward, and can only be used to offset up to 80% of business income, which means that no matter how bad your losses were, you’ll still be paying taxes.  That will be particularly on businesses that are high volume but small margin (i.e., high gross revenue but low net income).

I guess the only way to know if the new tax law is beneficial is to see what's actually in it.  Can't believe anything you read about it one way or the other which is frustrating.

[Oceander]

I guess the only way to know if the new tax law is beneficial is to see what's actually in it.  Can't believe anything you read about it one way or the other which is frustrating.

The research services do a decent job of summarizing it.  BNA has a good “roadmap” that gets almost all the changes, including things like a $2 decrease in the excise tax on beer from small brewers.

[Free Vulcan]

I've never lauded this as a some kind of historic tax overahual. It's a slight improvement with some good and bad things - but overall an improvement.