Financial ledge will raise taxes of 90 percent of Americans
Many long-standing tax breaks are set to expire at the conclusion of the year, developing the proverbial "fiscal cliff." If lawmakers do not tackle the problem soon, states a brand new report, most Americans will be paying a lot more in taxes next year. That includes the typical American household. Resource for this article:
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Looking at big problem
The nearing <a href="http://personalmoneynetwork.com/moneyblog/2012/09/06/u-s-competitiveness-ranking/">fiscal cliff</a> might be an enormous issue. The average household will pay an additional $3,500 in taxes during the year if something is not done, according to the report.
According to the report:
"The fiscal cliff threatens an unprecedented tax increase at year end."
A ton of tax provisions
Donald Marron is the Tax Policy Center director who pointed out that the number of temporary tax provisions are exceedingly high and are snowballing together.
At the end of the year, the Bush era tax cuts are set to end. Simultaneously, some $109 billion in automatic <a href="https://personalmoneynetwork.com/personal-loans/">spending</a> cuts will kick in. The accumulation of these events is called the financial cliff.
The automatic spending cuts are the wages of last year's partisan battle over the debt ceiling. The resulting "super committee" failed to come to an agreement on the best way to deal with the deficit.
At the end of the year, the two percentage point temporary payroll tax cut will end. Also, child tax credits will decrease from $1,000 per kid to $500. That will occur as part of the end to the Bush-era tax cuts. Also, wage and investment income tax breaks for married filers with children will end.
Ninety percent of Americans will see tax hikes
The scheduled events have to be changed. Without the change, 90 percent of people in America will pay a ton more in taxes.
In 2013, everyone making anywhere from $40,000 to $64,000 will see a $2,000 increase in taxes if nothing is done. Another $14,000 will be needed for those who make $108,000 or more.
A family earning $110,000 will pay higher taxes of around $6,000. The highest-earners -- the so-called one percent -- will be paying an average of $120,000 more.
The taxes increases, if totaled, would equal more than a $500 billion increased burden on Americans in the coming year. The top 20 percent of earners would be responsible 60 percent of that bill. They will even be hit with the reversal of tax cuts on capital gains and stock dividends that will not impact lower earners.
Avoiding double-dip recession
More than that, economists warn legislators that not addressing the financial ledge prior to the end of the year will likely put the nation into a new recession.
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