With unemployment rates nearing double-digits and the federal budget deficit soaring to an unsustainable $1.47 trillion, millions of American families are facing the potential of enormous tax increases at a time when they least can afford it.
A preliminary report, just released by the nonpartisan Joint Committee on Taxation (JCT), said that families will actually bear the brunt of the “tax tsunami” should the 2001 and 2003 tax cuts expire at the end of this year.
Among the most significant family-related tax increases, the JCT found that:
• The child tax credit will be cut in half, from $1,000 to $500 per child, costing 31 million families an average of $1,033 in higher taxes next year.
• The standard deduction will no longer be doubled for married couples relative to the single level and the 15 percent bracket will be reinstated, costing 35 million married couples an average of $595 in higher taxes in 2011.
• The 10 percent bracket will be eliminated, raising the lowest tax rate to 15 percent, costing 88 million taxpayers an average of $503 in higher taxes next year. The next lowest bracket — 25 percent — will rise to 28 percent, and the old 28 percent bracket will be 31 percent. At the higher end, the 33 percent bracket is pushed to 36 percent and the 35 percent bracket becomes 39.6 percent.
Many other cuts from the Bush administration are set to disappear and a new set of taxes will materialize. The left leaning Center for American Progress argues that the tax increases will go mostly to the wealthiest 5%, but it’s not just the rich who will pay. Unless Congress acts to extend the tax cuts, everyone’s taxes on personal income, capital gains and dividends will rise. Married couples will see their taxes rise even higher, as will families with children. The Tax Foundation indicated that a typical married couple with two children under 17, earning $45,000 a year would pay approximately $3,002 more in taxes next year should Congress fail to act.
Tax Foundation president Scott Hodge said, “I’m hard pressed to think of another moment in the history of the tax code in which we have had so many provisions expire at the same time impacting so many Americans all at once.”
For sixty-five years after World War II, Europe and America have pursued different economic models, and accordingly, moved in different economic directions. The American model has been low tax, low spending and small government. We have favored growth and individual responsibility. The European model is high tax, high spending and big government. It has favored fairness and equality. As a consequence, Europe has had unemployment rates that are double those of the United States, often hovering around 10 percent or more. Now that is no longer the case. Given the recent economic policies, the U.S. unemployment rates are now surpassing Europe’s.
The 2001 and 2003 tax cuts stimulated growth and got us out of a recession. Congress now has a unique opportunity to recognize the importance of marriage and family with actions that will help American families when they need it most.
Wondering what this means for you and your family? The Tax Foundation has created an income tax calculator website for families to verify just how much the tax-cut repeal will really affect their bottom line. Go to www.mytaxburden.org
Call to Action:
Unless Congress acts soon, you will see a massive tax hike on you and your family come Dec 31st, 2010. Tell your Senators and Congressman that you want the 2001 and 2003 tax cuts to be extended.
Senate and House switchboard: (202) 224-3121
or
Email your Congressman by going to: https://writerep.house.gov/writerep/welcome.shtml
Email your Senator by going to: https://www.senate.gov/general/contact_information/senators_cfm.cfm
Spencer Anderson is the executive director of Family Leader Foundation and Family Leader Network
