What Happens If Congress Does Nothing?

If Congress fails to extend the Bush tax cuts, the tax system will undergo the equivalent of unelective full-body surgery. Higher rates will hit every dollar earned from income and investment. Benefits from low-income people will fall. Taxes on rich families' inheritance will come roaring back. Over ten years, the effect on total tax income for the government would be in the trillions of dollars. Americans will miss out on a media tax cut of about $1,000, as this graph from the

So it's no surprise that Congress is working to avoid this tax hike, at least for some people, at least for some time. The Obama plan is to preserve the tax cuts for about 98 percent of Americans and let taxes on the rich rise to their higher, 1999-levels next year. But what happens if he and Congress fail to act, the same way they failed to extend the estate tax in 2009? What will change, and how?

Taxes can be confusing. So here's a simple slideshow primer from a recent presentation on the Great 2010 Tax Debate from the Tax Policy Center. Many thanks to Roberton Williams for permission to run the presentation on The Atlantic.

Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Never Tell People How Old They Look

Age discrimination affects us all. Who cares about youth? James Hamblin turns to his colleague Jeffrey Goldberg for advice.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

Never Tell People How Old They Look

Age discrimination affects us all. James Hamblin turns to a colleague for advice.

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

Video

Pittsburgh: 'Better Than You Thought'

How Steel City became a bikeable, walkable paradise

Video

A Four-Dimensional Tour of Boston

In this groundbreaking video, time moves at multiple speeds within a single frame.

Video

Who Made Pop Music So Repetitive? You Did.

If pop music is too homogenous, that's because listeners want it that way.

More in Business

Just In