By any measure, the impending tax increases are huge! Taxmageddon will amount to $494 billion in tax hikes. On an individual level, average taxpayers will see their taxes increase by about $2,000 to $4,000 next year!
This article from Education News is helpful in that it provides real life examples of how real people are going to get hit by Taxmageddon next year. $494 billion is an impossibly large number that no one can relate to. But boil it down to my level and you get my attention!
For example, here are Roberto and Juanita who have an income of $70,662:
Roberto and Juanita have an Adjusted Gross Income (AGI) of $70,662. They are concerned about the looming Taxmageddon tax hikes and want to know how it will affect them.
Their taxes will go up $4,138 next year due to Taxmageddon.
Let’s press this a little bit. That’s $344 a month. That’s a car payment. That’s a contribution to their IRA or their 401(k) or college fund. That’s a payment on their credit card that they’ve been trying to pay off.
And then there’s Frank who makes just $24,757 a year:
Frank has an Adjusted Gross Income of $24,757. He does not consider himself a “low-income worker.” He works hard and earns a steady living but he is on a tight budget.
Unfortunately, Frank will have to pay an additional $1,207 in taxes next year…
Frank’s monthly income, after deductions, is just over $2,000 a month. Another $100 a month taken out of that? What does that mean for Frank? A smaller apartment? Skipping some meals? Moving in with mother?
And then there’s Teasha who just started work. Yes, she found work! It pays her about the same as Frank:
Teasha has an Adjusted Gross Income of $23,917. She has just started her career and is glad she was able to find a job…
She will face a tax hike in 2013 of $1,099.
She’s just starting work. What a great incentive! Another $100 a month that she wasn’t expecting.
The article then explains how Taxmageddon will affect you: multiply your Adjusted Gross Income from last year—you’ll find it on the front page of last year’s Form 1040—by 6%.
That makes it real personal.