This content is provided by the Americans for Tax Reform Foundation.
In a matter of months, Americans will celebrate another New Year. What many will not know when the ball drops, however, is that the stroke of midnight will ring in the biggest tax hikes in American history.
On January 1, 2013, nearly $500 billion in tax hikes are slated to take effect. This slew of tax increases makes up the bulk of what the Congressional Budget Office has called 2013’s “fiscal cliff.” Other observers use more ominous language—Taxmageddon.
The term is justified.
Americans—many of them out of work—are already drowning in taxes, forgoing an average of 29 cents on every dollar they earn to federal, state, and local government. Ratcheting up taxes further would place additional strain on taxpayers. On average, Taxmageddon will foist a $2,200 burden on American families after 2013. It will also result in economic contraction, which the CBO estimated would be strong enough to plunge the country back into official recession.
Many of the tax increases in question are the result of low-tax provisions (like the payroll tax holiday and the 2001/2003 tax relief) set to expire after December 31, 2012. Others are entirely new taxes stemming from Obamacare.
Together, these provisions form a perfect storm of taxation. The dark clouds are forming already, as uncertainty over the looming tax debacle is paralyzing industry and holding up private sector investment. It will only get worse if Congress does not act to stop Taxmageddon.
The forthcoming series from the Americans for Tax Reform Foundation will analyze tax hikes scheduled to take effect on New Year’s Day. Each brief will highlight a single tax provision and the harmful effects it will have on American taxpayers, as well as the American economy.