According to Friday's Wall Street Journal, one of the not discussed aspects of the Healthcare bill being debated tonight in the House of Representatives is that it will partially repeal tax indexing for inflation.
According to the article:
"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."
Because this is in the middle of 2000 pages of legalese gobbeltygook, the provisions hasn't been very widely reported.
The article points out that indexing taxes to inflation has been in effect for thirty years. Both political parties have agreed that it is unfair to tax increases in income that represent inflation, rather than real gains in income. As government spending policies lead us into an era of inflation, this is going to be a very significant point.
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