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By Johnny Kampis | Missouri Watchdog
If the existing federal tax cuts expire, American taxpayers will see their taxes rise by $494 billion.
JEFFERSON CITY — The average Missourian will pay an extra $2,634 in taxes next year, if Congress does not extend the decade-long tax cuts, the Heritage Foundation reports.
If no action is taken before Jan. 1, taxes will increase $494 billion for American taxpayers, the right-leaning foundation says.
These hikes include the expiration of existing tax cuts and the implementation of policies in President Barack Obama’s health-care law, the Patient Protection and Affordable Care Act.
The Washington Post dubbed the looming situation “Taxmageddon.”
“Families, businesses and investors need to know how much tax they will pay in the future before making important economic decisions,” said Curtis Dubay, tax policy analyst for the Heritage Foundation. “The uncertainty caused by Taxmageddon means they are stuck in neutral while they wait for President Obama and Congress to act. This is slowing job creation and stopping many of the millions of unemployed Americans from going back to work.”
A June report from the Congressional Budget Office said keeping the tax cuts will cause the nation’s debt to soar, but economists say keeping them should boost economic growth.
The U.S. Bureau of Economic Analysis said Friday that the U.S. gross domestic product increased 1.5 percent in the second quarter of 2012, a decline from 2 percent during the first quarter.
The Heritage Foundation’s study says the 2.9 million taxpayers in Missouri will pay an additional $7.9 billion in taxes in 2013 under current laws. That’s an average increase of 5 percent per taxpayer.
The report breaks the statistics down by congressional district. Those in U.S. Rep. Todd Akin’s affluent St. Louis-area District 2 would average an increase of $4,765 each, while those in U.S. Rep. Jo Ann Emerson’s rural District 8 in southwest Missouri would pay $1,677 more.
U.S. Rep. Vicky Hartzler, R-Harrisonville, is among those in the House touting the Job Protection and Recession Prevention Act of 2012, which the body is expect to vote on later this week.
This bill would extend through 2013 the tax reductions of the Economic Growth and Tax Relief Reconciliation Act of 2001. House Resolution 8 also would extend the reduction in tax rates for dividend and capital gain income enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Collectively, those are known as the “Bush tax cuts.”
The legislation also extends the increased individual exemption amount from the Alternative Minimum Tax and allows increased expensing allowances for depreciable business assets.
Hartzler’s press secretary, Steve Walsh, cited a recent Ernst & Young study that said increased taxes could result in more than 700,000 lost jobs nationwide as reason for Congress to act.
“Companies would have a higher tax burden and might not be able to keep everyone on the payroll,” he said.
The U.S. Senate recently passed an extension of tax breaks for those making less than $200,000, but a bill that would extend those tax cuts for all income levels failed.
