Americans may be slammed by shocking tax hike
After nearly a decade of federal tax cuts, Americans could awaken New Year’s Day with a whopper of a hangover.
Breaks covering everything from child tax credits to the death tax are set to expire that day, less than six months from now, bringing higher payments for nearly every American who pays taxes.
“We’ve never in history seen anything quite like this, where such a major portion of the tax code is set to expire on a single date and affect so many Americans all at once,” said Scott Hodge, president of The Tax Foundation, a Washington nonprofit that tracks tax policies.
Enacted in 2001 and 2003, the cuts run out unless Congress votes to extend them. President Obama proposed extending some tax breaks, for couples earning less than $250,000 a year, but lawmakers could let them all expire.
If that happens, according to The Tax Foundation’s analysis, everyone would pay more from bottom to top: Taxes for a couple with two children and a $50,000 income would more than triple to $2,825 a year, while a couple with no children earning $1 million would pay $44,000 a year more in taxes, for a total bill of $298,510.
“In that first paycheck in 2011, everyone will see a chunk missing. There will be a significant impact,” said Curtis Dubay, senior tax policy analyst for The Heritage Foundation, a conservative Washington policy group.