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View Diary: House broken: How the GOP legislative machine turned into a doomsday device (176 comments)

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  •  Taxes will go up the most on the poor (0+ / 0-)

    47% pay little or no income tax due to a raft of deductions and credits that will be gone. Their income taxes will instantly shoot up when things like the Earned Income Tax Credit expire.

    •  Could you please give an example? (0+ / 0-)

      Use a single person earning $40,000 a year.  That's above average income in my town.

      Do the math and show us.....

      •  Math (1+ / 0-)
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        Gross: $40000
        Less personal exemption: -$3800
        Less standard deduction: -$5950
        Gives taxable income: $30250

        First $8700 taxed at 10%: $870
        Remainder taxed at 15%: $3232.50
        Total: $4102.50

        2013 after the cliff:

        Pre EGTRAA (first Bush tax cut) tax rates (tax year 2000):
        Personal exemption $2800
        Standard deduction $4400
        First $26250 taxed at 15%
        Remainder taxed at 28%

        The monetary values for all four items above will be indexed for inflation.  As far as I know, nothing done since 2000 has affected the personal exemption and standard deduction, and indeed both 2012 figures are 35% more than their 2000 equivalents.  

        Again as far as I know, the IRS has not published updated figures for personal exemption and standard deduction for 2013.  CCH, a tax research service, makes the estimate below.  Applying the same (admittedly rough) correction to the bracket limits gives

        Gross: $40000
        Less personal exemption: -$3900 (1.39x 2000 figure)
        Less standard deduction: -$6100 (also 1.39x 2000 figure)
        Gives taxable income: $30000

        First $36487.50 taxed at 15%: $4500 (36487.5 = 26250*1.39)

        Tax increase is $397.50, or 10% more than in 2012.

      •  Here's a calculator to show tax increases (0+ / 0-)

        A family of four with an income of $33,499 would pay $3,747 more if we go over the cliff. This will destroy families at the lower income range.

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