Inside Report (5)
Speaking of taxes. . . .
Indexing income tax rates to inflation may be in trouble when Congress next tackles the federal budget. Scheduled to take effect Jan. 1, 1985, the plan is designed to keep inflation from pushing wage earners into higher tax brackets - so-called bracket creep. Unfortunately (from the government's viewpoint), indexing reduces Uncle Sam's ''take'' at tax time. That's a brutal prospect at a time of $180 billion to $200 billion deficits. By one estimate, indexing could leave the government $39 billion poorer in 1987 than it otherwise would be. Insiders say an outright repeal of indexing could be tough to achieve. If that's the case, there might be a compromise.se.
One possibility: putting a cap on indexing. Index if inflation stays below 3 to 5 percent. If inflation is higher, let the brackets creep.m