Without actions from Congress, the report says taxes will go up next year by 20 percent, or $536 billion overall. It will hit Americans at every income level including those living below the poverty line. For a middle income family making $40,000 per year, the tax increase is $2,000.
The increases are so large because the nation's biggest tax cuts all expire three months from now on New Year's Day. They include the Bush-era federal income tax cuts, the payroll tax cut that lowered Social Security and Medicare taxes, and several remaining stimulus tax cuts. They all go away January 1 unless Congress and the president reach a deal on the budget.
Many economists are concerned that a tax increase of that size will shock the economy and trigger a recession by reducing the cash taxpayers have to spend. But now, Congress and the president have a firm price tag on what it costs if they don't reach a budget deal after the election.