What is Taxmageddon, and why will it cost U.S. families $4,100? Quite simply, this is a large tax hike that could happen as two key tax cuts are scheduled to expire by the end of the 2012.
Both the Bush-era tax cuts as well as the payroll tax break are set to expire. Even the Federal Reserve Chairman Ben Bernake recently warned Congress of the dangers of Taxmageddon on the U.S. economies and U.S. families. If the tax cut expirations are not addressed by Congress, then U.S. taxpayers will have to pay $310 billion more in 2013. Families of four making about $70,000 a year will experience a tax increase of about $4,100.
While many people believe that these tax numbers will only affect people earning more than $250,000, they will not. There are middle income families that will be affected by both the payroll tax break expiration as well as by the reduction of the child tax credit from $1,000 back down to $500. Bernake said, "Recovery could be endangered by the confluence of tax increases and spending reductions that will take effect early next year if no legislative action is taken."
At this point, Congress does not seem to be anywhere near taking any type of action on this situation. If not, then the U.S. taxpayers will end up paying. The solution is certainly not to simply continue wide-spread tax cuts across the board. However, the solution is also not impose wide-spread tax increases across the board either. Politicians need to actually work together to make sure that they don't hurt Americans who are struggling the most.
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Comments: 16
I bet there will be an increase in people applying for food stamps and other kinds of help. Meanwhile the top 1% ..... get richer.
They are losing their wealth as well, and most that were considered wealthy, have fallen from that group.
The worth of all of us, has dropped by 40%, and the so-called 'rich' have lost the the highest percentage of that.
The other 'false fact' that many believe is that those that are rich is a constant: in reality, who is in that group changes every year. New people make it, and old people lose it - all the time.
In the Stock Market, there is a half-true joke, that to become a millionaire, you start with a billion dollars ....................
The income of the top 1% went down 37% between 07 and 09, while the poorest went up 3%, the middle dropped by 2%.
Tell a lie often enough eh?
I have been trying to get people to understand this for over 3 years.
Families making 50K or less will have great increases in both their tax rates, and reduction of credits (earned income credit, child tax credit, additional child tax credit).
While so many want to scream about the 3 to 4% increase on the rich - there is also the 3 to 10% increase on the middle class, plus the loss of credits.
So many want to talk about the higher rates in earlier days, but do not look at all the other taxes that are here now, and were not in existance then!
I know that in my area, in the last decade, they have added higher State income tax rates, new city income tax rates, and even a school district incomne tax rate.
Those last 3 add up to about 15%.
So those that want to go back to a 75% rate - add that too it ............
Corn for example, that is involved in the price of practically every food we buy, averaged 2.50 a bushel in the 80's. Think about eggs and milk - corn is primary food for both chickens and cattle.
It was been around 6 all last season, and is pushing 6.50 this year.
The things corn is not directly involved in, are still influenced, because farmers simply plant corn, instead of oats, wheat, soy bean, cotton etc., which drives the price of all those products up.
Soy Bean was 6.15 a Bu avg then, now it is 12. Most people doi not think about the number of things Soy bean is involved in - baby formula, soy oil, flour, meal, animal feed, oils, soap, cosmetics, resins, plastics, inks, crayons, solvents, and clothing for example.
Fat chance of that happening. The first order of business for any politician is to keep his job. And keeping his job tends to be a full time job, leaving little if any time for things that matter to the public at large.