With all the talk about the impact of the fiscal cliff, you might ask, “What does it mean for me?”
The Tax Foundation hopes to help answer that question:
The impact of expiring “fiscal cliff” provisions in the tax code would hit families across the country and in all income groups, constituting an overnight tax increase that could consume over 8% of their total income, according to a new analysis by the Tax Foundation. Both high and low income groups would see larger increases than middle-income taxpayers, with urban areas as different as Stamford, Connecticut and McAllen, Texas among the top areas affected.
Dramatic changes to both tax and spending policy at the federal level are scheduled to take place at the end of the current year unless Congress acts. On the tax side, the most significant changes are the expiration of Bush-era income tax cuts and provisions relating to the Alternative Minimum Tax, which will increase liabilities nationwide. When ranked by city, the heaviest impacts will fall in Texas, Georgia, Oregon, and Arizona, with metropolitan areas in Arizona, California and Virginia filling out the top ten.
“We found that higher and lower income areas tended to be affected more than middle income areas—higher income areas from changes to the Alternative Minimum Tax and lower income areas from the Bush tax cuts,” said Tax Foundation analyst and programmer Nick Kasprak.
Starting with data from the Internal Revenue Service and the U.S. Census Bureau’s American Community Survey, the Tax Foundation estimated the increased tax burden for the median four-person family in each of 366 urban areas using the Fiscal Cliff Tax Calculator, available online at www.MyTaxBurden.com.
