WASHINGTON, D.C. — The President is expected to make his first post-election comments on economy and the so-called Fiscal Cliff. That so-called “cliff” is a combination of the pending expiration of the Bush tax cuts and a reduction of government spending.
The average family’s tax bill could go up by $1,500. Add to that, a number of tax deductions that also are decreased or eliminated January 1st. For example, the Child Tax Credit, which gives this average family a $1,000 tax deduction this year, will be reduced to $500 in 2013. Also, the 2% Social Security tax cut is set to end. For the average family, this will mean a tax hike of $1,000 per year.
The “Marriage Penalty Reduction,” will also expire; it’s a break that enabled low to middle-income couples filing together to pay less in taxes than they’d pay if they filed separately; and for lower income households, the loss of the earned income tax credit will hit hard.
Another big impact will be that unemployment benefits will drop from 99 weeks to 26 weeks starting January 1. And for higher-income Americans, those getting most of their income from investments will be impacted significantly when the capital gains and dividend tax rates increase to match the income tax rate. The IRS has been quoted as saying for 2013, the average Oregon family will pay $3,205 more.