There’s been a lot of talk, again, about the fiscal cliff and what its effects would be if allowed to happen. Most people I know have no real idea of just what it all means except that Americans will have to pay more federal income tax.
Allowing the Bush-era tax cuts to expire would mean that the 10% tax bracket would go back to the 15% tax bracket, reduced deduction for married tax filers, 2 % increase in what employees pay into Social Security and the elimination of the Alternative Minimum Tax. The net result would be an excess of over $3,000 in additional taxes for the average family.
Based on the median family income by state, it just so happens that the five states that will get hit the hardest if the fiscal cliff is not avoided are blue states. New Jersey will see the highest percentage increase in additional taxes. They have a median family income of $101,682. Going over the fiscal cliff would result in 6.82% higher taxes equating to $6,933 in additional taxes. Maryland is second with a median family income of $106,707 and a pending tax increase of 6.74%, equating to $7,194 in additional taxes.
According to figures released by the Tax Foundation, the amount of additional taxes paid based upon median family income by state would range from $3,000 to $7,000 accordingly:
- $7,000+ - 1 state (Maryland)
- $6,000 to $6,999 – 3 states
- $5,000 to $5,999 – 1 state
- $4,000 to $4,999 – 6 states
- $3,000 to $3,999 – 40 states
Now realize that both political parties are holding all of us as hostages in the negotiations to avoid falling over the fiscal cliff. The Democrats are saying that they will not accept any plan that does not include raising the taxes on everyone making $250,000 or more. The Republicans are saying that they will not accept any plan that does not include keeping the tax cuts on all Americans.
I don’t know about you, but I can’t afford another $3,000 in federal taxes, especially when I’m going to have to pay an additional $2,400 to $3,000 in taxes due to Obamacare. Yeah, that’s right. None of the fiscal cliff figures take into account the additional Obamacare tax increases that we are all going to face.
If we teeter over the fiscal cliff, I’m facing about $2,500 in additional taxes from Obamacare, $3,500 in federal taxes from the fiscal cliff and I am being forced to purchase health insurance that looks like it will cost me around an additional $4,000 to $5,000 a year. The net result will be a loss of $10,000 to $11,000 a year out of my pocket.
I also don’t want to see a tax increase on the wealthy as that will result in a loss of thousands of jobs and a worse economy than we have now. I can’t afford to lose another $10,000 from my budget, can you?