The Explosive Tax
Jimmy Hogan has done some invaluable calculations on the effect of wage inflation on people's tax burden under the Naifeh income tax plan.

The conclusion: while the average individual or family's wages are treading water, getting pay raises to offset inflation, more of their income is subject to taxation each year as their income rises above the standard deduction. Over 20 years, if the average individual sees a 100 percent increase in wages, their tax burden will rise 1,732 percent.

A family making $35,000 this year would pay $90 in taxes under the Naifeh plan, but would pay $1,648.92 in taxes in 2022, even though their income would have increased only enough to offset inflation. In other words, while their income doesn't rise more than inflation, their tax burden soars under the Naifeh plan because wage inflation pushes more of their income above the tax plan's exemption level, making it subject to the 4.5 percent tax.

"No politician has to stand up and ask for a tax increase to make this happen," comments Hogan. "Once instituted this tax raises itself at a tremendous rate. It's no wonder the state government is drooling over such an increase. This tax is not just elastic - it's explosive."

Under the Naifeh plan, the average Tennessean's tax burden could rise 17 times faster than their income over the next 20 years. Explosive is one good word for it. Unconsionable, unacceptable and insane are others.

For another look at the effect of wage inflation on people's tax burdens under the Naifeh plan, scroll down or click here to read my recent post, The Automatic Tax Increase.