Deal or No Deal, Your Taxes Are Probably Going Up
January 1, 2013 - 12:09 pm
Whether the House kills, passes or amends the Senate’s fiscal cliff bill, about 77% of American households will see their taxes go up in 2013 as compared to 2012.So says the Tax Policy Center.
The biggest impact for most households comes from the expiration of a two-percentage-point payroll-tax break that existed for 2011 and 2012. It basically hits all working people. But the bill also contains sizable tax increases for the wealthy, compared with 2012 levels. (Of course, now that the fiscal cliff has arrived, supporters argue that the legislation actually represents a tax cut, because tax rates technically went up for just about everyone at midnight Monday.)
The average tax increase for U.S. households paying higher taxes would be about $1,635. But that figure is somewhat skewed by the significant tax increases in store for high-income households under the bill. Almost 100% of households with incomes over $500,000 would see a tax increase. For households between $500,000 and $1 million, it would average $15,055. For households with incomes over $1 million, it would average $171,330.
Households making more than $500,000 would see their average effective federal tax rate rise by 2.2 percentage points to 32.1%. Their after-tax income would drop by 3.1%. Households over $1 million would see their average rate rise by 5.2 percentage points, to 38.5%. Their after-tax income would drop by 7.8%.
The Tax Policy Center analysis of federal tax rates includes individual and corporate taxes, as well as payroll taxes and the estate tax, so it’s broader than just the individual income tax.
You’re not hearing much talk about this, mainly because we have a dishonest and dysfunctional government. But mostly, it’s just dishonest.