• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • New Calculator Shows How Much More Taxes Will You Pay Next Year

    We are on the precipice of the largest tax increase in United States history. On January 1, 2011, the 2001/2003 tax relief will expire. All Americans who earn income will see their taxes go up as a result (even those who work but don’t pay any federal income taxes) unless Congress acts soon to prevent this massive tax hike.

    The constant refrain from those who oppose the tax relief is that they benefited only the rich. If the tax cuts expire as scheduled, this myth will be proven untrue once and for all. But taxpayers don’t have to wait until next year to see how much bigger a bite Uncle Sam will take. The Tax Foundation recently created a tax calculator that will show them how much more they will pay in taxes next year.

    The Tax Foundation’s calculator calculates taxpayers’ liability under three different scenarios: (1) Congress extends all the 2001/2003 tax cuts; (2) Congress allows all the tax cuts to expire; and (3) some of the tax cuts expire and some are extended (President Obama’s tax plan).

    The calculator asks users for a few selected pieces of information and then calculates their tax bills under each scenario. For instance, a married couple with two children under 17 earning $45,000 a year with no other income and $2,500 in state and local tax deductions and $2,500 in real estate taxes would see the following results:

    Note: Obama’s proposal includes the $800 Make Work Pay credit that was put in place as part of the stimulus package. This accounts for the $800 difference between “Income Tax If Bush Tax Cuts Are Extended” and “Income Tax under Obama’s Tax Proposals.” The Make Work Pay credit expires after 2011 under the President’s budget, so the categories return identical results for subsequent years.

    This hypothetical family will pay $3,002 more in taxes next year if Congress allows all the tax relief to lapse. That is more than 3 percent of their income that they won’t get to spend as they wish but will instead be handed over to Congress to spend as it wishes.

    The calculator is a great tool for taxpayers to figure out how much of their hard-earned income they will lose if Congress continues to refuse to extend the tax cuts. It is also a powerful tool for dispelling the myth that the tax cuts were only for the rich—as the significantly higher tax bill the middle-income family above attests.

    Time is running for short for Congress to extend the tax cuts. The heavy toll higher taxes would impose on the economy and every American family’s budget demands that Congress make extending the tax relief one of its top priorities in the time it has left. Because extending the tax cuts is so important, Congress should not let doing so slip until a “lame duck” session where the probability that it allows the tax relief to lapse increases exponentially.

    Posted in Economics [slideshow_deploy]

    25 Responses to New Calculator Shows How Much More Taxes Will You Pay Next Year

    1. Pingback: Good News: You and I are Both Rich | CitizenLink

    2. Pingback: Oh Yes, Your Taxes Are Going Up | Liberty Pundits Blog

    3. Mike in Allentown says:

      $4000 for me, which I would like if the government will cut spending accordingly. Tax cuts without spending cuts is like living off your credit cards.

    4. B in Minneapolis says:

      More than $5000 for us – married, 3 little kids, 2 incomes. Taxing the "rich" will fix it all…

    5. muffler says:

      Call them tax increases is wrong. The tax cuts under Bush were never met with any spending cuts. The trend for paying off the deficit was reversed and we ended up accumulating more. Additionally 1 war and 1 optional war were started at the same time tax cuts were enacted. Generally speaking this is poor management. Since tax rates are at the lowest levels for the top 5% in generations and our expenses (including 2 wars) are peaked the idea of extending the tax relief is worse management.

    6. usejwat says:

      OK muffler. So we should raise taxes, continue spending and all will work out. It is just like the immigration debate. Don't secure the border just make everyone legal. That really solves the problem. The issue is revenues are down and it is proven that lowering taxes increase revenue due to investment. Taking more money decreases investment which decreases jobs which decreases the tax base. Simple logic shows how raising taxes will slow the economy even more. If raising taxes solved problems then we would have any fiscal issues would we. It just doesn't work. I agree we need to cut spending but raising taxes is all they talk about not cutting spending. I wish raising taxes would fix our problems but, as proven in the past, it won't.

    7. Bill, Kansas City says:

      No, the extending the tax cuts will keep the economy going, letting them expire, will force us into a double dip recession. A novel idea is for government to cut spending.

    8. Jeanne, Little River says:

      Shouldn't you be providing a disclaimer with the Tax Foundation's calculator; i.e., this organization is closely aligned with the Heritage Foundation and the president worked closely with the Bush Administration on the tax cuts. It would certainly help your reader to make a determination as to the validity of the results. Personally, I will wait until I understand the current Administration's proposal before I make a decision. Just saying!

    9. Richard, New Orleans says:

      But remember, over the long haul, tax increases actually DECREASE revenue to the Treasury, while tax cuts INCREASE Treasury revenue. Why? Glad you asked.

      People will respond to tax rate changes in ways the Washington elite claim to not foresee. If the taxes on a business go up, they will have less profit and will hire less workers which robs the Treasury of the taxes the new worker would have paid.

      For examples of the reactions to high taxes just see the Sen Kerry yacht purchase issue. Due to high taxes in Mass (his home state) he bought and is berthing his boat in Rhode Island where the taxes are lower. Rush Limbaugh and LeBron James moving to and working in Fla due to the absence of a state income tax also come to mind.

      There are literally millions of other examples, but despite what Washington claims, higher taxes will LOWER revenue recieved!

    10. Pingback: The Mahablog » Scamming the Rubes

    11. Jill, California says:

      Conservatives aren't speaking up enough about the ramifications of allowing the tax cuts to expire for the so-called wealthy.

      It's not enough to protest that raising taxes on the wealthy will keep them from hiring and investing. We have to keep driving home the point that those tax increases will be passed on to everyone else in the form of higher costs. The so-called wealthy aren't going to absorb those taxes by themselves.

      All of us will be "taxed" at a higher rate if the taxes go up for the wealthy. We'll pay it at the pump. We'll pay it at the grocery store. We'll pay it everywhere we go. There's no such thing as burdening only the wealthy.

    12. Ben C. Ann Arbor, MI says:

      "Muffler" Clearly you support the premise that spending other peoples money is justified. It's always "they" should pay more money, not "I" should pay more money. Taxes are a necessary evil in society but taxes have consequences. For me, it is the culture of entitlement that has corrupted our country. If all of the entitlement programs would expire our country would flourish because we would all have more money to spend. But then, politicians who can't promise "free" money won't get elected so the cycle continues. Tytler's premise is proving correct – sadly.

    13. Pingback: Republican

    14. Dark, Quasar Galaxy says:

      My taxes will be $13,968 if Obama extends my tax cut.

      My taxes will be $18,976 if the Republicans filibuster *my* tax cut.

      It's pretty clear who is on my side.

    15. Drew Page, IL says:

      The problem is even more complex. Obama spins his fantastic stories, none of which are true. He makes dozens of promises, none of which he intends to keep.

      The lame stream media have become his publicists and public relations management team, supporting whatever he says or does, downplaying, if not completely ignoring anything that could be considered detrimental to his interests and marginalizing any and all of his critics.

      50% of the workers in this country pay no federal income taxes. That leaves the financial burden of all Mr. Obama's giveaway programs to fall on the 50% of us who do pay federal income taxes. Illegal aliens? Mr. Obama's position is that we need more of them, so long as they remember who let them in and granted them amnesty when it comes time to vote. Yes, he's found the way to grow his constituency of dependency, using our ever-increasing tax money to do it.

    16. Tom Beene Bossier ci says:

      Anyone that thinks tax increases will work, PLEASE take a look at California. hey have taxed their tax base right out of the state while the state's spending kept going up. Now Ca. is waiting on the great kenyan to bail them out. OH!!!!!!!!!!!!!!! and that will be with your taxes.

    17. Susan, NYC says:

      "My taxes will be $13,968 if Obama extends my tax cut.

      My taxes will be $18,976 if the Republicans filibuster *my* tax cut.

      It’s pretty clear who is on my side."It’s pretty clear who is on my side. Dark, Quasar Galaxy on July 27th, 2010"

      It is pretty clear who is the liar in this room.

    18. Dark, Quasar Galaxy says:

      Susan,

      It is? Why? We have a combined income around $130k. We have 2 kids and a mortgage. I used the formula, and the last line, 'Income Tax Under Obama's Proposal', is what it is. Heck, even the example shows that the typical family will have an $800 savings over what GWB's tax cuts are.

      What I understand will happen is that: Obama will enact his proposals extending my family's tax cut and eliminating the tax cut for the upper 3%. I am *not* in the upper 3% and I doubt you are as well. His proposal will extend my middle class tax cut.

      And the Republicans will filibuster.

      They will filibuster my tax cut so they can protect the upper 3%. Think about that.

      Feel free to tell me why I'm wrong. Or where I'm lying. Yeah, I suppose it's possible that the Republican's won't filibuster Obama's tax cut proposal. But I doubt it. … I eagerly await your response.

    19. DaveM, Illinois says:

      "For instance, a married couple with two children under 17 earning $45,000 a year"

      is misleading. In order to get the values posted here, _EACH_ spouse must make $45,000/yr, for a total family income of $90,000. Then the calculations work out.

    20. Mike, Wichita Falls says:

      We will pay an additional $200 per month in federal income tax if the tax cuts expire. I guess one of my legitimate charitable contributions will just have to do without next year and beyond for the "greater good".

    21. Jersy Shore says:

      I am disappointed that the tag line at the bottom of the calculator screen completely ignores the fact that the Obama Budget is actually the lowest of the three options.

      I suppose the Senate Republicans will filibuster his -tax cut- like they did last time?

      Frankly, we would have been better off if the Bush tax cuts were never passed, because they were never offset by an equivalent reduction in spending.

      Anyone claiming to be a fiscal conservative needs to start with this fact before they go blaming anyone else. We have already been living off the "credit card" for nearly a decade. It is time to not only cut back on spending, but also pay more than the minimum payment to reduce the deficit.

      Had we not screwed up the tax system with those tax cuts the current deficit would be much lower.

    22. Bob, Massachusetts says:

      Frankly, I don't see Jersy's point. The calculator is quite clear what the three amounts would be. A deception would be if they left out Obama's proposal

      completely.

    23. OR says:

      Don't forget to add your health care benefits that you get from your employer as income. If your employer pays say $5,000 for your healthcare benefits next year it will be added to your gross income as part of the new healthcare bill. So if you make $45,000 and your employer pays $5,000 for you to have healthcare you will now have to claim $50,000 in income. So yes it may look like you will be paying less in taxes but I’m guessing most of us will be paying more.

    24. Justin says:

      what about a single veteran parent with 1 child under 17 that's autistic and recieves free medical, dental and all other insurances. The single parent makes $45,000 a year, how much tax will be due to that parent?

    25. po'mama says:

      I'll get approximately $550 more back under the Democratic plan than the Bush Cuts. Single parent small income. I'd love to earn enough to have to pay taxes! Thanks to everyone who does!!

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×