Tax cut standoff could mean $1,600 increase for most taxpayers
Jul 26, 2012
The Congressional standoff over tax cuts could mean tax increases for 114 million middle class American families ranging from $1,600 to more than $5,000, according to a new report from the White House.
Republicans want to extend all current tax cuts through 2013, giving the warring parties another year to come to terms. Democrats are resisting extending tax cuts for households earning more than $250,000.
One of the party’s leaders, Sen. Patty Murray D-Wash., said they were willing to let all the tax cuts expire to coerce Republicans to comply.
This week the Senate passed a Democratic-sponsored bill extending tax cuts for those making less than $250,000. However, the Republican-dominated House is gearing up to pass their version of a bill extending tax cuts for everyone. Both bills are expected to fail.
The $1,600 expected tax increase is an average for households making under $250,000. The actual increase would depend on the size, income and other characteristics of the household.
A married couple earning $50,000 to $80,000 with two children would see a tax increase of $2,200, the paper said. A childless couple making $200,000, including $20,000 of capital gains income, would see their tax bill grow by $5,540.
A separate report this week from the Joint Committee on Taxation (JCT) indicated that the average millionaire would see a tax cut of $74,505 in 2013 if all the “Bush tax cuts” were extended.
In contrast, the JCT estimates that the average American with pre-tax earnings between $50,000 and $75,000 would see a tax cut of about $1,034 if the cuts were extended for them.