Thursday, November 15, 2012

What Will The Tax Cliff Cost You?

The Tax Foundation has published an analysis on the impact of the tax cliff on a typical family in each state.
To arrive at the typical family, the Tax Foundation used Census and IRS data to estimate income and deductions for an average two-child family in each state.
They then ran those numbers through two tax calculations: the first using 2011 tax law, and the second using projected 2013 law. The rub of course is the 2013 law, as Bush-era and Obama tax cuts are expiring. It is unknown what, if anything, will take its place. This is the “taxmaggedon” you may have read about. Another key piece to 2013 is the alternative minimum tax (AMT), as the most recent AMT “patch” expires with the 2012 tax year.
The rankings go from #1 to #50, and one does not want to be #1. That dubious distinction goes to New Jersey, not exactly an economical place in which to live under the best of circumstances.
In our corner of the world, the TriState area (Ohio, Kentucky and Indiana) came in as follows:
                                                $ Increase                                 % Increase
Ohio                                          $3,437                                       4.72%
Indiana                                     $3,653                                       5.27%
Kentucky                                  $3,437                                       5.18%

So – if the politicians accomplish nothing – the tax cliff will cost the average TriStater approximately $300 per month. This is real money, folks.

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