2016 Taxes
A friend of mine reminded me in an e-mail today that Taxes are changing in 2016. Here is his brief summary:
Medicare tax went from 1.45% to 2.35%
Top Income tax bracket went from 35% to 39.6%Top Income payroll tax went from 37.4% to 52.2%Capital Gains tax went from 15% to 28%Dividend tax went from 15% to 39.6%Estate tax went from 0% to 55%
A 3.5% Real Estate transaction tax was added.
The IRS
IR-2015-119, Oct. 21, 2015
WASHINGTON — For tax year 2016, the Internal Revenue Service today announced annual inflation adjustments for more than 50 tax provisions, including the tax rate schedules, and other tax changes.
Social Security
Note, inflation was enough to adjust more than 50 tax provisions, but take a gander over to the Social Security web site:
Cost-of-Living Adjustment (COLA):
Monthly Social Security and Supplemental Security Income (SSI) benefits will not automatically increase in 2016 as there was no increase in the Consumer Price Index (CPI-W) from the third quarter of 2014 to the third quarter of 2015.
Putting it all together very briefly
Not being an accountant, I wanted to know what’s the difference between “inflation” and CPI-W.
According to bls.gov:
What is the CPI?
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
How is the CPI used?
The CPI affects nearly all Americans because of the many ways it is used. Following are major uses:
As an economic indicator. More.
As a deflator of other economic series. More.
As a means of adjusting dollar values. More.
And according to the dictionary:
inflation: Economics. a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency
So one is used to adjust the value of the dollar and the other just results in affecting the value of the dollar, clear?
Healthcare Act
But the even bigger scam is that inflation is not the primary reason for so much change in the taxes. What the IRS apparently doesn’t want to remind anyone in an election year is that while there are some “value” changes as a result of inflation, which apparently only exists for taxes and not social security, ALL of the taxes mentioned above are courtesy of your local Democratic representative who voted for PPACA, the Patient Protection and Affordable Care Act, or simply Obamacare. After all, they have to pay for the new subsidies found in your friendly neighborhood health care exchange, also known as the health care market.
So just-in-case you were feeling a little heavy in the wallet, never fear, Uncle Sam is here to help with that. Here’s to Tax day 2017!