Americans face $3,500 fiscal cliff tax hit
U.S. — American households face an average tax increase of $3,500 if Congress doesn't act to avert the fiscal cliff, according to a new analysis from the Tax Policy Center.
Overall, 88% of households would end up with higher taxes.
That's because a record number of tax increases -- due mostly to the expiration of temporary provisions put in place since 2001 -- are set to take effect starting in January. All told, the center estimates that taxes would rise by more than $500 billion in 2013.
The range of average tax increases is enormous depending on one's income level.
The top 1% of households, which have incomes above $506,210, would face an increase of $121,000. Within that group, the top 0.1% -- those making more than $2.66 million -- would get hit with a tax hike of nearly $634,000.
By contrast, households making up to $20,113 would see a $412 average increase. That may simply represent a smaller refund to those households, many of which have very little if any federal income tax liability to begin with.
Households in the middle -- with total incomes between $39,790 and $64,484 -- can expect a roughly $2,000 increase.
"Households with low incomes would be particularly affected by the expiration of tax credits expanded or created by the 2009 stimulus," the Tax Policy Center wrote on Monday. "And households with high incomes would be hit hard by the expiration of the 2001/2003 tax cuts that apply at upper income levels and the start of the new health reform taxes."
Few think, however, that Congress will let all the scheduled tax increases take effect. But at the moment it's not clear what kind of fiscal cliff deal lawmakers will negotiate. And anything they do resolve won't happen until after the election.