The tax cuts instituted under President Bush are going to expire at the end of this year. Maybe you believe those in Washington will extend the current tax law, but that would take an act of Congress. If they’re not extended, how serious will this be to the average person? How will this tax increase of $2.4 trillion affect the average tax payer?
This lack of repeal will increase taxes for 17 million seniors an average of $2,034 per year according to the Heritage Foundation, a Washington D.C. non-profit think tank. That is approximately $170 per month! Many seniors will find themselves dipping into savings to pay the taxes, if they have savings at all.
For 42 million families with children, the average tax impact will be an additional $175 each month. In my experience of working with families, few have the reserves in their budget to be able to afford this additional tax increase. This will further slow the economy in all likelihood.
Business owners will also see tax increases. Many of the 26 million small businesses in the US today are already struggling with the decline in revenue caused by the weakening economy. Many will be forced to close their doors if they see an estimated tax increase of $3,637 per year. In addition, the death tax, which is the leading cause of termination of successful small businesses, will be reinstated.
Finally, the marriage penalty tax will be reestablished, forcing married couples to pay more in taxes than single taxpayers. In the year 2000 the average cost for couples punished by the marriage penalty tax was $1480 per year. It is estimated that 44 million people will be affected by this tax increase.
The Wall Street Journal has described this as “the biggest tax increase in our nation’s history.” What most people fail to remember is that right after the Bush tax cuts were implemented, state and city governments immediately raised taxes and many of the federal funds for the states and cities were cut off. Those high state and city taxes are still in place to this day. Adding to the taxes that already exist will result in a substantial burden for individuals, families, seniors and businesses.
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