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Taking home a larger portion of your hard-earned paycheck would seemingly put more money in your pocket.
The thing is, federal income taxes are imposed for a reason.
They fund many key services Americans rely on each day.
However, individual income taxes was the primary source of revenue in 2023.
Not paying federal income taxes could add up fast, both literally and figuratively.
Here are three reasons Damsky saideliminating this major tax could hurt the middle class.
If income taxes were eliminated, the money would have to come from somewhere else.
Everything from food, rent, home values and transportation will soar in cost.
It might feel hard to imagine, but he said buying a home would become even more challenging.
Imagine a world in which middle-class families have afew more thousand dollarsper month, he said.
Theyll become more aggressive in bidding for homes and push prices higher.
Rising home prices and greater competition could put homeownership even more out of reach for middle-class families.
Social Services Would Decline
Without income taxes, Damsky said local communities would suffer.
Local communities receive federal funds for things ranging from highways to homelessness, he said.
With any potential decline in federal revenues, local communities will receiveless federal support.
He said the impact would be felt on multiple levels.
This will be a double whammy, he said.
Imagine receiving less support as prices are soaring.
At a time when folks will needeven more support, theyll be receiving even less.
Iffederal income taxesare eliminated, he said states will react accordingly.
Not all statesimpose individual income taxes.
All but four statesreceived most of their fiscal year 2022 revenue from personal income or general sales taxes.
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