1. Highest tax bracket changing from 35% to 39%
2. Lowest tax bracket changing from 10% to 15%
3. Capital gains tax increasing from 15% to 20%
4. Tax on dividends treated as ordinary income
5. Social Security contribution increasing by 2%
6. 25 million additional taxpayers subject to Alternative Minimum Tax
7. Standard deduction drops by $2000
8. Reinstatement of the marriage penalty
9. Reduction in child tax credit
And the list goes on. For a very detailed and well presented list of the changes in the tax law that will take effect if there is a failure of Washington to reach agreement go here.
Some estimates say that these changes taken together would impact middle class taxpayers anywhere from $700 a year to as much as $2000 per month, depending on income and deductions currently being taken. Obama has pegged the number at $2200.
But while these amounts may seem like a lot to ask of already struggling citizens, there is a general sense in Washington that revenue must be increased whether or not the economy produces more jobs and income to drive revenues up naturally.
At the top of the list is the mortgage interest deduction, and the reason it is getting the most attention is because it offers the largest single revenue source. However, it is hard to find anyone willing to suggest it be repealed entirely.
One idea that is being suggested is that the total available deductions on schedule A be limited to $50,000. This would insure that only taxpayers making over $150,000 are impacted. But, of course, the trade off is that total revenues from such a change would only be a pittance in the effort to reduce the deficit.
Be sure to read our other posts from the last few weeks as we have explored every nook, cranny, and nuance, and have pointed you to other articles that flesh out even more details.
For more on this subject also read:
- Shocking Unintended Consequences if Mortgage interest Deduction is Eliminated
- Government and Mortgage Holders Fight Over $100 Billion Per Year Tax Advantage
- Options to Change or Replace Mortgage Interest Deduction
- President Obama News Conference: Tax Increase Still On for Rich to Fix Fiscal Cliff
- More on the Fiscal Cliff and Your Mortgage Interest Deduction - Diana Olick of CNBC
- 9 Reasons to Eliminate the Home Mortgage Interest Tax Deduction
- 10 Benefits to Taxpaying Homeowners of Mortgage Interest Deduction
- 7 Social Benefits of Home Ownership and 6 Social Benefits of Renting