Not to be a Grinch on the eve of Christmas Eve, but while we wait for the fiscal cliff to be resolved, it's worth a look at what tax bills could be in 2013.
While Obama is an admitted "hopeless optimist" who believes a tax and spending deal can be reached by Dec. 31, I'm not so sure.
Yeah, I know that less than two weeks ago I professed a tiny bit of faith that a deal would be struck before Dec. 31. But even then I qualified that prediction by saying I didn't expect any agreement to be reached much before the last day of the year.
Now, after House Speaker John Boehner watched his troops turn on him when he tried to get his Plan B passed, I'm thinking we'll go off the cliff. Only then will lawmakers deal with taxes, both individual income tax rates et al for 2013 and retroactively for temporary tax breaks (aka extenders) that have already expired or will do on at the of 2012.
If that happens, the Tax Policy Center says that combined taxes in 2013 will increase by more than $500 billion affecting nearly 90 percent of Americans.
OK, $500 billion is too big of a number for anyone to truly grasp. So TPC analysts have broken it down for us by income levels.
That gets us to a more acceptable, at least from the standpoint of having a better idea of the dollars involved, average tax bill increase of $3,446.
And that larger average federal tax bill amount 2013 if we fall off the fiscal cliff is today's By the Numbers figure.
Don't freak. That's the average.
TPC has calculated the possible tax bill increases for various income levels, too.
Folks who make less than $10,000 will see an increase of $217. If you earn between $50,000 to $75,000 your tax bill will go up $2,399. And if you make more than $1 million, you'll see a $254,637 increase in your 2013tax bill.
If you're not in one of those three income brackets, the table below gives your some other earnings and tax bill increase possibilities.
|Percentage Change in After-tax Income||Dollar increase in Average Federal Income Tax Bill|
|Less than $10,000||-4.1%||$217|
|$10,000 to $20,000||-3.6%||$537|
|$20,000 to $30,000||-4.5%||$1,064|
|$30,000 to $40,000||-4.4%||$1,417|
|$40,000 to $50,000||-4.3%||$1,729|
|$50,000 to $75,000||-4.6%||$2,399|
|$75,000 to $100,000||-5.1%||$3,688|
|$100,000 to $200,000||-6.3%||$6,663|
|$200,000 to $500,000||-6.9%||$14,643|
|$500,000 to $1 million||-8.0%||$38,969|
|More than $1 million||-11.4%||$254,637|
When you call your Senators and Representative next week to urge them to come to a deal, you might want to refer to these numbers.
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