When President George W. Bush passed his landmark tax cuts I wasn’t thinking about what the rich were getting. I was thinking about my middle class family. I remember it like it was yesterday. We had our first child that year, and even though we had insurance we still had a bunch of co-pays we had to pay. I got a raise (something that hasn’t happened since Obama was elected) and for the first time in my life when I received my paycheck the entire amount of the raise was included. Every time I ever had a raise before that I would try to calculate what it meant in take-home pay and come up short, or over. That year, it was all in my check. That was nice.
Now President Obama says he doesn’t want to extend those tax cuts. He doesn’t want me to keep the money I’ve earned. The Democrats would only agree to the tax cuts if they had an expiration date. Did anyone notice how well the economy did after they were passed? If only they were permanent, perhaps the recovery would have been a bit more robust. But when small business owners, and anyone thinking about spending money on their homes, or anything else, start anticipating tax hikes, they stop spending money. They stop hiring. They start saving, if there’s anything left to save. Who knows what’s going to happen tomorrow when the folks in Washington get rid of those tax cuts that helped so many middle class Americans.
So, how will the expiration of the Bush tax cuts affect you? If you’re in the middle class, it’s going to hurt. You might have made it through the recession, but the Democrats aren’t done with you yet.
Starting January 1, 2013, Americans will face a $494 billion tax increase, the highest ever in one year. According to The Washington Post, congressional aides started calling it “Taxmageddon”—a chilling reference fit for an apocalyptic nightmare. Federal Reserve Chairman Ben Bernanke has warned that it will be a “massive fiscal cliff” for the economy.
How will this affect you? Heritage has a new Taxmageddon page that shows the impact of these tax hikes on individuals. It includes an interactive map where you can click on your state to see what the average tax increase will be, based on the average income of taxpayers in your state.
Heritage research shows that families will see an average tax increase of $4,138. Baby boomers’ average increase will be $4,223, and low-income taxpayers can expect a $1,207 increase. Millennials will be hit with an average hike of $1,099, and retirees $857. Check out the infographic to see where you fall.
Taxmageddon falls primarily on middle- and low-income Americans. That’s because, contrary to the President’s rhetoric about “the wealthiest Americans,” 60 percent of the Bush tax cuts went to middle- and low-income taxpayers. The expiration of the patch on the Alternative Minimum Tax (AMT) will cause these taxpayers to pay a tax that was never supposed to hit them, and the expiration of the payroll tax cut is a tax hike almost exclusively on middle- and low-income families.
This is only the direct impact on individual taxpayers. Americans at all income levels will feel the pain of Taxmageddon, because it will slow job creation and wage growth. At 8.2 percent unemployment, it’s the last thing the economy needs.
Where are these tax increases coming from? Under current law, tax policies in seven different categories will expire, and just five of the 18 new tax hikes from Obamacare will begin.
Read the whole thing. If you think things are bad now, just wait. If I were a conspiracy theorist, I might think the Democrats were trying to ruin the economy. But really, what they’re trying to do is divide us and buy votes. Ruining the economy is just a bonus in their eyes.