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burntbonez's avatar

Under what circumstances do taxes go up in the US?

Asked by burntbonez (5202points) February 20th, 2013
7 responses
“Great Question” (0points)

In planning for retirement, you want to pay taxes at their lowest. Right now, I’m in the 15% bracket. I could convert some retirement savings to a Roth at that rate, but not much.

In twenty years, will rates be the same? Will they go up to deal with the deficit? Will Congress not allow tax increases, no matter what?

Whither taxes in the US?

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tom_g's avatar

This site appears to have the federal tax brackets per year going back to 2000 if you want to look at the historical rates. But who knows what will happen with taxes.

SadieMartinPaul's avatar

Tax rates are determined by the whims and wishes of Congress. The past is no indicator, whatsoever, of future trends. It’s impossible to guess who’ll be serving in Congress in 20 years, or what the political demographics will be.

mhellums's avatar

Congress controls set all tax brackets but yes, taxes will go up in 20 years time.

SadieMartinPaul's avatar

If you’d asked me, 20 years ago, whether tax rates would have increased by now, I would have bet real money on “yes.”

burntbonez's avatar

Twenty years ago, Clinton was in office. Why would you have thought taxes would go up by now, @SadieMartinPaul?

wundayatta's avatar

I doubt taxes will go up, except there may be bracket creep. That is, as incomes go up, the tax brackets will stay set at the same place. This will lead to tax increases without anyone actually doing anything.

There could be periodic “tax cuts” either by reducing the rates on the brackets, or by raising the bracket boundaries but keeping the rates the same. Of the two, the former is more impressive. Every once in a while, though, you have to add a new top bracket, like Obama is seeking to do now. Then you can continue to give tax cuts without actually cutting taxes. It’s all a shell game.

So I have to say I don’t think there will be any more tax increases, ever (with the exception of adding new top brackets every decade or two), unless there is a real emergency, like a war or something.

Now, the wage taxes for social security and medicare are another story. But they usually deal with those things by raising the age of eligibility. Still, we could see an increase in those rates. But those rates are capped, so in fact, as inflation occurs, we are actually seeing reductions in those rates as well. What we need is to raise the cap periodically. That doesn’t increase rates. It just increases the amount of income that the tax applies to. Again. No tax increase.

Smoke and mirrors, my friends. Smoke and mirrors.

ETpro's avatar

It’s not going to happen till we admit that tax cuts do not actually pay for new spending initiatives. We’ve been living the lie that they do from Ronald Reagan forward, with a brief intermission in the Clinton administration and now Barack Obama campaigning to admit tax cuts don’t increase revenues, winning that argument, but butting heads with a Congress unwilling to deal with facts.

While living the lie, debt has gone from 20% of a tiny GDP back in 1980 to 100% of a ginormous GDP today. That’s how well tax cuts fund new spending.

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