Families across the country might soon have to start trimming back their monthly budgets, with lawmakers running out of time and ideas for averting a crushing set of tax hikes.
President Obama, cutting his family vacation short, was flying out of Hawaii late Wednesday and planned to be back in Washington by Thursday morning. But it’s not clear what he’ll do once he gets there — as of Wednesday, congressional leaders on all sides reported little to no bipartisan progress, or even conversations, toward a fiscal crisis deal over the Christmas break.
Obama aides and lawmakers are now talking about a scaled-down package as the most likely vehicle for solving the problem, something that could at least prevent most of the scheduled tax hikes.
But without at least a short-term fix, families are going to have to break out the calculators in the new year and figure out how to make do with less.
“You’re going to have less money to spend in a very difficult economy with very little clarity on how the economy will pick up in the near future, or even in the long run,” financial adviser Ed Butowsky said. “We are entering into a very difficult economic environment, unfortunately.”
According to numbers crunched by the Tax Policy Center, millions of families will take a hit, to varying degrees.
For those making below $10,000, the tax increase amounts to roughly $300. But those making between $40,000 and $50,000 would pay an additional $1,700 in 2013.
Up the pay scale a bit more, households earning $50,000-$75,000 would send an extra $2,300 to Washington. And for those making over $200,000 — but under $500,000 — the tax bill will grow by roughly $14,000.
The numbers go up from there. Those making more than a million dollars a year could pay more than $200,000 in additional taxes.
There are still some escape hatches on the road to this scenario. Congress and the White House could come together on a scaled-back deal; they could pass a short-term bill extending current rates and resume the debate next year; or they could let the tax hikes take effect, only to come back in 2013 and retroactively patch up the mess.
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