With only 5 days until we may find ourselves at the bottom of the fiscal cliff, what pain awaits us in the form of higher taxes if we hit bottom because the President and Congressional leaders cannot reach some agreement to avert the fiscal cliff?
On January 1, 2013, if the Bush-era tax cuts are left to expire and if no other deal or plan is reached, taxes will increase by more than $500 billion dollars during 2013 and the pain will be felt by nearly 90 percent of American taxpayers. The Tax Policy Center (TPC) has done an analysis of how the increase in taxes will affect taxpayers in various income groups. This analysis is presented in summary form in the table below.
The table shows that if your income is $10,000 or less, your 2013 taxes would rise by $217. The typical family of four with incomes ranging between $50,000 and $75,000 would see their taxes increase by $2,399 in 2013. Taxpayers making more than $1 million would see an increase of $254,637 in taxes in 2013.
Table T12-0217 Fiscal Cliff Analysis, Source: http://www.taxpolicycenter.org
Also, keep in mind that the 2 percent payroll tax cut will expire on December 31. The loss of this tax break will take an additional $1,000 out of the pocket of that average family of four making $50,000 per year in 2013.
The prescription for the pain: take two aspirin and call your congressman in the morning!
Although President Obama is returning early from his Hawaiian vacation, today appears to be another wasted day of negotiations highlighted by only another round of name calling and finger pointing. Time for a deal and a soft landing is getting short.
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