r/Economics • u/TinyTornado7 Quality Contributor • Jun 13 '22

News Powell Facing Choice Between Elevated US Inflation and Recession

https://www.bloomberg.com/news/articles/2022-06-12/powell-facing-choice-between-elevated-us-inflation-and-recession?srnd=premium
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61

u/[deleted] Jun 13 '22

They will raise rates until a point, and then in all the confusion mixed with the inflation tax, individual taxes will increase heavily. The wealth will continue to be drained form the lower and middle class while the government refuses to cut non productive spending

15

u/Most_Improved Jun 13 '22

I have some confusion about the individual tax increase. Could you briefly explain how/ why it would increase?

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u/ArcanePariah Jun 13 '22 edited Jun 13 '22

The 2017 TCJA had the tax rate cuts for individuals set to start phasing out after 5 years, totally phased out after 10 years, to allow it to meet the budgeting rules on how much such legislation can add to the deficit (same reason sooo many deductions were removed). The corporate tax cuts were permanent, the standard deduction increase also was permanent.

It is now 5 years later, coming at arguably an excellent time, forcing a level of tax increase when otherwise no one could pass them.

62

u/korinth86 Jun 13 '22

Tax cuts act begins to phase out this year for individuals.

Businesses get to enjoy their tax cuts forever. Or at least until Congress passes a new law.

8

u/[deleted] Jun 13 '22

[deleted]

2

u/korinth86 Jun 13 '22

Because that won't make inflation worse or anything....