Incentives against Inflation

Despite the stated enthusiasm of the Carter government for federal tax reform, there is one species of correction in the national taxing system that seldom gets official mention: the idea of indexing federal tax rates to relieve the constant ravages of inflation.

That such a reform is urgently needed is apparent from the recent economic record. Inflation by itself, or progressive taxation by itself, would each be bad enough. But put the two together, and the combined potential for public mayhem is appalling. As cost-of-living adjustments push money wages constantly upward (while actual purchasing power increases little, if any), the taxpayer is bumped into higher income brackets— and that means ever-higher tax rates.

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M. Stanton Evans

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Despite the stated enthusiasm of the Carter government for federal tax reform, there is one species of correction in the national taxing system that seldom gets official mention: the idea of indexing federal tax rates to relieve the constant ravages of inflation.

That such a reform is urgently needed is apparent from the recent economic record. Inflation by itself, or progressive taxation by itself, would each be bad enough. But put the two together, and the combined potential for public mayhem is appalling. As cost-of-living adjustments push money wages constantly upward (while actual purchasing power increases little, if any), the taxpayer is bumped into higher income brackets— and that means ever-higher tax rates.