In this video, Whitney Hill explains the difference between a tax increase and a tax rate increase.
A Tax Increase occurs regularly without legislation. Most taxes are tied to something like the property tax being tied with the appraisal value of your home and sales tax is tied to the value of the purchase. These things go up with inflation. With that, you are paying more tax simply because the value of your home and purchase prices have gone up.
For most people that isn’t a real big problem, but for people with a fixed income that is a problem over the long hall. Their income just doesn’t keep up with inflation.
A Tax Rate Increase affects everyone. This is when legislation is put through to actually raise the rate at which you are taxed. Inflation or no inflation, this legislation raises taxes and a higher percentage of your income is going to taxes.
I hope this clarifies the difference between the two increases.
Don’t miss my blog explaining how the bonds you are voting on this election will also increase your taxes.