Failure to steer the economy away from the fiscal cliff — a combination of tax hikes and spending cuts striking at the end of this year — will raise taxes on everyone, though lower-income Americans will feel more of a sting, according to The Wall Street Journal.
In raw dollar terms, wealthier Americans will pay more in taxes if Congress and the White House fail to avoid the cliff, which could send income, payroll and investment taxes climbing, while unemployment and other benefits expire.
Though in percentage terms, tax burdens will rise the most on lower-income families.
Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video
The fiscal cliff “clobbers low-income households with children,” Roberton Williams, a senior fellow at the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute, told The Journal.
“It is striking how large some of the increases are.”
Not only would taxes go up, but tax breaks and other benefits would expire also.
A household with a child reporting income of between $10,000 and $20,000 receives a $2,761 payment from the Internal Revenue Service today, though after the cliff, the figure falls to $1,324, The Journal reported.
Married couples earning $20,000 to $30,000 who receive small but welcome $15 payments from the IRS today would owe an average $1,408 thanks to expiring tax breaks.
Some politicians say those breaks must stay in place.
“We’re taking this incredible mallet and are about to smash America,” Newark’s Democratic Mayor Cory Booker said Sunday on ABC’s “This Week.”
“People are going to be cut out of programs that support the poorest Americans getting access to healthy food …. This is really what bothers me right now.”
Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video
© 2013 Moneynews. All rights reserved.