New analysis shows 77% of households will pay more taxes after fiscal cliff deal
The fiscal cliff bill’s impact would be far-reaching for American taxpayers, and particularly painful for very high-income households, according to a new analysis.
photo 401(K) 2012 via Flickr
About 77% of American households would see a tax increase compared to their 2012 tax levels, according to the analysis by the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute.
The biggest impact for most households comes from the expiration of a two-percentage-point payroll-tax break that existed for 2011 and 2012.
It basically hits all working people.
The bill does contains sizable tax increases for the wealthy, compared with 2012 levels.
Wealthy filers with incomes of $1 million or more will see a $170,341 spike, on average.
The ending of the payroll tax break will have the broadest reach, with most of the nation’s 160 million workers seeing smaller paychecks. Wage earners will have to pay the full 6.2% in payroll taxes, up from the 4.2% they’d been paying for the past two years. This means those earning $30,000 annually will get $50 a month less in their paychecks, while those making $113,700 (the maximum amount subject to payroll tax) will see $189.50 less each month.
The rich will also get hit by the increase in the tax rate to 39.6% for couples with adjusted gross incomes above $450,000, or single filers above $400,000. Millionaires will pay $122,560 more a year just from this provision alone, according to the Tax Policy Center. And they’ll have to pay a 20% levy on capital gains and dividends, up from 15%.
