Under Fiscal Cliff Deal, 77% of Households Will See Higher Taxes This Year
Under the deal crafted by the Senate and recently approved by a majority in the House, the country will avoid going over the “fiscal cliff,” but it will not stop a vast majority of Americans seeing higher taxes this year. The deal does not extend a payroll tax cut of two percent that was put into effect at the height of the economic collapse in 2008. Bloomberg News is reporting that, due to that tax hike and the others negotiated between the Senate and Vice-President Biden, 77 percent of Americans will have a higher tax burden this year.
The actual full number of households that will see a tax hike is 77.1 percent of US households, mostly because of the expiration of a payroll tax cut but also taking into account the other provisions, according to preliminary estimates from the nonpartisan Tax Policy Center in Washington.
More than 80 percent of households making between $50,000 and $200,000 will see an average tax hike of $1,635 for 2013.
Of course, the highest amount of tax hikes are reserved for top earners. Income, capital gains, dividends, and estate taxes are all rising in 2013. The top one percent of taxpayers (those with more than $506,210 per year) will see an average of $73,633 in new taxes this year.
The top 0.1 percent of taxpayers, those with incomes over about $2.7 million, would pay an average of $443,910 more, reducing their after-tax incomes by 8.4 percent.
The top .o1 percent of taxpayers would be responsible for 26 percent of the additional taxes imposed by the legislation.
The legislation also lets tax rates rise on all incomes over $400,000 for an individual and $450,000 for a couple for 20313. Instead of paying 35 percent of their income in taxes, it will rise to 39.5 percent.
On top of state taxes, some wealthy filers will now see a tax rate of over 50 percent of their income.
Do you think tax rates are high or just about right?