When you hear President Barack Obama and others tell you that taxes are not increasing on the middle class, that is simply a flat out lie.
The budget deal passed by the U.S. Senate today would raise taxes on 77.1 percent of U.S. households, mostly because of the expiration of a payroll tax cut, according to preliminary estimates from the nonpartisan Tax Policy Center in Washington.
More than 80 percent of households with incomes between $50,000 and $200,000 would pay higher taxes. Among the households facing higher taxes, the average increase would be $1,635, the policy center said. A 2 percent payroll tax cut, enacted during the economic slowdown, is being allowed to expire as of yesterday.
Much of that burden is concentrated at the very top of the income scale.
The top 0.1 percent of taxpayers, those with incomes over about $2.7 million, would pay an average of $443,910 more, reducing their after-tax incomes by 8.4 percent. They would pay 26 percent of the additional taxes imposed by the legislation.
Among households with incomes between $500,000 and $1 million, taxes would go up by an average of $14,812.
Top Tax Rate
The bill, being discussed by House members today, would raise the top tax rate to 39.6 percent from 35 percent last year, starting with income over $400,000 for individuals and $450,000 for married couples.
The top tax rates on capital gains and dividends would go up to 23.8 percent, from 15 percent last year. The new rate includes a 3.8 percent tax from the 2010 health-care law that took effect today.
The Tax Policy Center’s definition of income is a gross measure that includes items such as the employer’s share of payroll taxes, making it larger for many households than the adjusted gross income shown on tax returns.
- Senate-Passed Deal Means Higher Tax on 77% of Households (bloomberg.com)
- Senate Bill Will Increase Taxes on 77% of US Households (thegatewaypundit.com)
- Analysis: 77% of Households to See Tax Increase (blogs.wsj.com)
- House Republicans Drop Bid to Add Spending Cuts to Budget – Bloomberg (bloomberg.com)
- Fiscal cliff: How it affects your taxes (utsandiego.com)