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Sky-high inflation could lead to higher taxes for millions of Americans
Inflation is ‘killing’ the consumer: Expert
Kaltbaum Capital Management Gary Kaltbaum discusses the markets, Federal Reserve and inflation.
Millions of Americans could be in store for higher taxes as a result of the hottest inflation in 40 years.
That's because of a phenomenon known as "bracket creep," which happens when taxpayers are pushed into higher-income brackets even though their purchasing power is essentially unchanged due to steeper prices for most goods.
Although the IRS adjusts federal income taxes for inflation, a recent analysis published by the Tax Foundation shows that 15 states fail to account for inflation when drawing the brackets for taxes on wages and income. Another 18 states do not index personal exemption tax to inflation.
HOW THE FEDERAL RESERVE MISSED THE MARK ON SURGING INFLATION
Altogether, 22 states have at least "one major unindexed provision," which could mean higher taxes for millions of taxpayers who are already confronting the steepest inflation since 1981. The government reported last month that the consumer price index, which measures a basket of everyday goods including gas, cars and food, rose 8.5% in March from the year-ago period and 1.2% on a monthly basis.
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