The Fiscal Cliff Will Cost a Median-Income Family $2,000

More

Doing nothing is the natural state of the 112th Congress. But if Congress does nothing to avert the so-called "fiscal cliff" of 2013, taxes would increase by half-a-trillion dollars and deep spending cuts in defense and other government spending could push the U.S. into an official recession.

How would you pay for the fiscal cliff? Nine in ten Americans would see higher taxes. The payroll tax cut would go away. The stimulus tax credits for the poor would go away. The Bush tax cuts first passed in 2001 and 2003 and re-signed by Obama would go away. Almost every major tax rate affecting families -- whether payroll, income, or investments -- would go up.

This first graph shows that after-tax income would decline for every quintile by at little as 3% and as much as 12%.

Screen Shot 2012-10-01 at 5.00.09 PM.png

The second graph shows that the top 1% -- who earn more than the bottom 40% combined --  would pay $100,000 or hundreds of thousands of dollars more to the IRS.

Screen Shot 2012-10-01 at 8.47.44 PM.png
... and that's why even this do-nothing Congress will have to do something about taxes before January 2013. Democrats and Republicans don't agree on much. This is half a trillion dollars that nobody in Washington wants.


Jump to comments
Presented by

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

Get Today's Top Stories in Your Inbox (preview)

What Is the Greatest Story Ever Told?

A panel of storytellers share their favorite tales, from the Bible to Charlotte's Web.


Elsewhere on the web

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

The Death of Film

You'll never hear the whirring sound of a projector again.

Video

How to Hunt With Poison Darts

A Borneo hunter explains one of his tribe's oldest customs: the art of the blowpipe

Video

A Delightful, Pixar-Inspired Cartoon

An action figure and his reluctant sidekick trek across a kitchen in search of treasure.

Video

I Am an Undocumented Immigrant

"I look like a typical young American."

Video

Why Did I Study Physics?

Using hand-drawn cartoons to explain an academic passion

Writers

Up
Down

More in Business

Just In