Congress has put off dealing with the fiscal cliff – a huge suite of legislation – until after the Nov. 6 election. If it doesn't do something by Dec. 31, taxes will go up on virtually everyone.
How bad will your tax bite be next year?
Bad, real bad, if Congress and the White House can’t reach a compromise on the "fiscal cliff" – the enormous suite of fiscal laws that are set to expire or take effect at the end of the year, and that include the expiration of Bush-era tax cuts as well as other tax credits.
The scale of that fiscal cliff – what will happen to the tax bills of 158 million households – is now coming into closer focus. And the view is daunting for just about everyone who collects a paycheck, deposits dividends, or gets a tax credit of some sort.
On Monday, the nonpartisan Tax Policy Center issued a report that finds that Americans will pay an additional $536 billion in taxes next year if there is no compromise. That works out, on average, to about $3,500 per household.
“That frankly is a lot of money,” said Donald Marron, the director of the TPC, which is a joint venture between the Urban Institute and the Brookings Institution.
According to the report – introduced at a press conference on Monday – almost no one will be spared. About 88 percent of all households will see their taxes rise. Middle-income households will see an average increase of about $2,000. Low-income households will see an average increase of $412, and upper-income people will pay an additional $14,173 on average.
Among the reasons: