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CONTACT: Leslie Shedd |
Tax Talk: An Income Tax Increase for the History Books
Starting in January, American taxpayers will be hit by one of the largest tax increases in American history unless the 2001 and 2003 tax cuts are extended. They will see an increase in their tax burden on dividend payments and capital gains payments. They will also see a decrease in some very popular tax credits, including the Child Tax Credit. And married couples will be hit even harder with the reinstatement of the marriage penalty. I plan to discuss all of those tax increases in the coming weeks, but this week I want to highlight the increase that will impact the largest number of American taxpayers: the increase in income taxes.
Here is a chart outlining the change people can expect in their income tax rates.
| Individuals & Businesses with Taxable Incomes in the Following Ranges | 2012 Tax Rate* | 2013 Tax Rate* |
| Up to $8,700 for single filers Up to $17,400 for married couples |
10% | 15% |
| Between $8,700 and $35,350 for single filers Between $17,400 and $70,700 for married couples |
15% | 15% |
| Between $35,350 and $85,650 for single filers Between $70,700 and $142,700 for married couples |
25% | 28% |
| Between $85,650 and $178,650 for single filers Between $142,700 and $217,450 for married couples |
28% | 31% |
| Between $178,650 and $388,350 for single filers Between $217,450 and $388,350 for married couples |
33% | 36% |
| Over $388,350 for both single filers and married couples | 35% | 39.6% |
*On that range of income
As you can see, income taxes in almost every income tax bracket will increase. And that doesn’t even count the penalty many married couples will be faced with that will increase their income tax burden even more. That means almost every American taxpayer will see an increase in their income tax – which really means a decrease in their paycheck.
But it’s not just individuals that will be hurt by this tax increase. Many small businesses file their taxes as individuals, depending upon how big the business is and how it is set up. So in addition to raising taxes on American families while unemployment remains above eight percent since February 2009, allowing the 2001 and 2003 tax cuts to expire will also raise taxes on the very same people we need to create jobs. I’m no economist, but even I know that’s math that just doesn’t add up.
I know President Obama and some Congressional Democrats are pushing to only extend some of the 2001 and 2003 tax cuts. But in this economy, that’s just irresponsible. There are even prominent people in their own party that agree with me. And on top of that, President Obama and many of the Congressional Democrats now advocating to raise these taxes voted to extend them in 2010.
Congress has two choices: renew the current tax rate or do nothing, causing tax rates for all taxpayers to increase. Doing nothing is the worst thing we can do right now. We simply cannot afford higher taxes and more regulations. That’s why I am going to continue to fight to renew all of the 2001 and 2003 tax cuts.
Next week on Tax Talk, I will discuss how the Child Tax Credit will be affected if the 2001 and 2003 tax cuts are not renewed. I encourage you to tune in next week by visiting my website.