Fiscal Cliff Jump? $3,500 Per Household
October 1, 2012 by UPI - United Press International, Inc.
WASHINGTON, (UPI) — Nearly nine in 10 households would see their tax bills increase if the so-called fiscal cliff take effect, the Urban-Brookings Tax Policy Center said Monday.
The report indicated the U.S. Treasury would be owed $536 billion more in 2013 if something isn’t done to avert the fiscal cliff — the name given to what would happen if nothing were done to prevent the tax increases from taking effect, The Hill reported.
The average household would see an increase of nearly $3,500, the report said.
While all households in all tax brackets would be affected, the policy changes would not be the same for all income levels, the report said.
The lowest-earning households would be hit by the end of the payroll tax cut and enhancements of tax breaks such as the Earned Income Tax Credit, the report said.
On the higher end, the biggest impact would come from the expiration of tax rates on income and capital gains enacted during the George W. Bush presidency and tax increases included in the 2010 healthcare overhaul, the document said.
Taxpayers in the middle would be affected by the loss of the payroll tax cut and the return tax rates to the levels under President Clinton, the report said.
“There is a sort of accidental nature to this,” Eric Toder, one of the paper’s authors, told The Hill. “I don’t think anybody sat down and said, ‘Oh, wouldn’t it be wonderful if we had all these provisions expiring at once at the end of 2012.'”
The Tax Policy Center also included the expiration of current estate tax rates, the patch that keeps the alternative minimum tax from affecting more middle-class families and a number of targeted tax breaks, The Hill said.
Also at the end of the year, the economy faces billions of dollars in automatic spending cuts.
Congressional members have have squabbled over whether the tax cuts should be extended across the board as Republicans want or allowed to expire for the wealthiest taxpayers as Democrats seek. However, both parties have agreed to try to reach agreement to avoid the fiscal cliff after they return to Washington following the November elections.