Courtesy of
the Tax Foundation, here's the link
to a pretty cool little calculator that will help you assess the impact of the
coming "fiscal cliff" tax changes to your federal tax burden:
This
calculator looks at three scenarios:
1.) The
expiration of all Bush and Obama tax cuts.
2.) The GOP
plan to extend the Bush-era tax cuts.
3.)
President Obama's plan to partially extend the cuts for families making under
$250,000 per year and singles making under $200,000.
I used the
calculator to do a quick calculation for a family with 2 children under 17
years of age with total income of $80,000 annually ($45,000 plus $35,000) and
here are the results:
Net income
taxes (excluding payroll taxes) will range from $7,138 for scenario 1 and
$4,935 for scenarios 2 and 3. Total tax liability and effective total
federal tax rates (in brackets) will be $13,258 (17 percent) for scenario 1,
$11,055 (14 percent) for scenario 2 and $9,455 (12 percent) for scenario 3.
If Congress
allows the tax cuts to expire, this fake family of mine will pay $2,203 more in taxes,
a drop in take-home income of 3 percent.
The fiscal
cliff is expected to affect typical families in each state differently.
On top of the expiry of the Bush and Obama tax cuts, the Alternative
Minimum Tax could cause a problem for many Americans. If, for
example, the AMT is not "patched" for the current year, the exemption
level would rise to what it was 12 years ago and credits like the Child Tax
Credit would not be allowed, pushing up taxes owing for millions of American
families.
Here is a
chart showing what could happen to the taxation level for a median four person
family in the top ten states with the highest tax increases:
Here's what
happens in the "least affected" ten states:
It certainly
looks like Congress has its "work" cut out for it over the next four
weeks, doesn't it?
great
ReplyDelete