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Show lArs WESTER-- ' AMERICANA mm SAUFTaKE NEIGHBORHOOD weekly community news for metro Salt Lake Published at 383 East 1700 South Salt Lake City, Utah 84115 FOR ALL DEPARTMENTS, CALL 467-801- 4 volume two Voice of Business Arch Booth WASHINGTON - Here's one effect of inflation that I'll bet you haven't thought about: It raises your taxes. It's a sneaky tax increase, too, because it has occurred while politicians have been loudly claiming credit for lowering your taxes. Basically, it works like this. The pay raises that we receive over the years reflect in part increased productivity and in part compensation for the loss in the dollar's purchasing power. But the federal income tax is progressive. The government's share of your income goes up as you make more money, even though the extra dollars may not buy enough to make up for what you have lost to inflation. Sound confusing? Let's look at a concrete example. Take a hypothetical family of four. In 1963, the breadwinner made $10,000. His federal income tax bill came to $1,372. His Social Security tax was $174. So, he had $8,454 left after federal taxes. The same family, making 1973, would owe $905 federal income tax and $585 Social $10,000 in rJn $?,299. That's the sneaky tax increase-- a 49 percent tax increase j paid total federal taxes of $594, to iv have the same after-ta- x purchasing power today you'd have to earn $7,088, and the tax bill on that would be $831. If you earned Security tax, leaving $8,510. If we stop there, it looks like the family is a little better off in 1973 than it would have been in 1963. Inflation Factor But, the dollar has lost 42 percent of its value since 1963. It takes $12,005 today to buy what $8,454 would buy in 1963. So our typical family of four would need to have $12,005 left after taxes today just to be as well off as it was in 1963. How much income does it take in 1973 in order to have $12,005 left after federal taxes? Hold on to your hat. It takes $14,304. The 1973 income tax bill on $14,304 comes to $1,667. The Social Security tax is $632. That leaves $12,005. The total federal tax bill for the family making $1 0,000 in 1963 was $1,546. To have the same purchasing power, the same standard of living, that family today would need $14,304, and the federal tax bill on that income $25,000 then and paid taxes of $5,492, you'd have to earn $35,968 today, paying $8,267 in taxes. The Cruelest ncrease I Inflation is the cruelest tax increase. It hits hardest at those on fixed incomes. It puts into higher tax brackets people who are really not better off than they were when they were earning less. And it enables the politicians to escape responsibility for openly raising taxes. In this Issue . . "Man on the Street pg. 2 Special Neighbor . . . A P9- is on the same purchasing power! Some other comparisons: If you earned $5,000 in 1963 and forty-fou- c Thursday, August 2, 1973 r,r--r The Sneaky Tax Increase By number FREE - 4 Classified Ads . . . pg. 7-- 8 |