With many families suffering financially from a long and bearish recovery, a recent report conducted by the Tax Policy Center (TPC) doesn’t help to ease families’ fears that they will keep even less of their earnings. The TPC report estimates that if scheduled tax hikes take effect in 2013, taxes will increase by $536 billion dollars. As a result of the massive tax hikes, nearly 90% of all families will suffer a $3,500 tax increase.
According to the TPC, the two largest tax hikes set to hit the majority of families include “the temporary cut in Social Security taxes and the expiration of the 2001/2003 tax cuts.”
Both tax hikes combined with remaining hikes represent a tremendous shock to families and could prove to be troublesome to the U.S. economic outlook. The TPC report states that the “resulting macroeconomic tightening [from tax increases on families and businesses] could well push the country back into recession in 2013," an observation made by both the CBO and Fed.
Below is a table showing the impact that tax hikes will have on the average family:
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Table |
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Average Provisional Tax Burden on Families |
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Tax Provision |
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Total in Dollars |
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1. Payroll Tax |
$721 |
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2. ACA Taxes |
$171 |
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3. 2003 – High Incomes |
$146 |
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4. 2001 – High Incomes |
$334 |
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5. 2009 Tax Provisions |
$144 |
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6. Tax Extenders |
$367 |
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7. Estate Tax |
$161 |
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8. Rest of 2001-03 Cuts |
$1,120 |
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9. AMT Patch |
$281 |
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Total for All Provisions |
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$3,446 |
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Total Taxmageddon Burden |
$536 Billion |
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Source Urban Brookings Tax Policy Center Microsimulation Model (Version 0412-7) |
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