What Will The Fiscal Cliff Cost You?
American consumers and businesses will pay much higher taxes next year if a package of tax increases and spending cuts known as the “fiscal cliff” takes effect as scheduled Jan. 1.
The nonpartisan Congressional Budget Office says the measures would push the economy into recession and drive the unemployment rate to 9.1 percent next year.
The rate is now 7.9 percent.
Below are the main elements. The estimated dollar figures are for calendar year 2013:
|Amount, in billions|
|Higher taxes on income below $250,000, higher estate taxes, alternative minimum tax.||$279|
|Higher taxes on income above $250,000.||52|
|Expiration of Social Security tax cut.||115|
|Expiration of temporary tax breaks for businesses and individuals.||110|
|Expiration of extended unemployment benefits.||30|
|Defense spending cuts.||32|
|Across-the-board cuts to education, health, law enforcement, other programs.||53|
|Source: CBO, Tax Policy Center|
The tax increases wouldn’t affect everyone equally, though all taxpayers would pay more. Here are the average increases for people at different income levels:
|Income level||Tax increase|
|Lowest 20% ($20,113 or less)||$412|
|Low-middle 20% ($20,114 – $39,790)||1,231|
|Middle 20% ($39,791 – $64,484)||1,984|
|Upper-middle 20% ($64,485 – $108,266)||3,540|
|Highest 20% ($108,267 and above)||14,173|
|Top 1% ($506,210 and above)||120,537|
|Source: Tax Policy Center|
(Copyright 2012 by The Associated Press. All Rights Reserved.)