The White House Thursday released a fact sheet illustrating the importance of resolving the debate of the “fiscal cliff” for African-Americans, showing black families could see their taxes rise by up to $4500 if an agreement is not reached.
The fact sheet comes as negotiations between President Obama and Congress remain stalled over billions in tax increases and spending cuts scheduled to be start on Jan. 1 that some economists say could plunge the U.S. back into recession.
The White House fact sheet shows that, like for white families, the expiration of the tax cuts for the middle-class would raise taxes for most black families by more than $2000.
Here’s the breakdown of the potential tax increases and their impact, as provided by the White House.
Example 1: A typical middle-income African-American family of four: a married couple with
two children with income between about $50,000 and $85,000 would see a $2,200 tax increase.
A tax increase of $1,000 because the Child Tax Credit will fall from $1,000 to $500 per child.
A tax increase of about $900 because of merging the 10 percent tax bracket into the 15
percent tax bracket.
A tax increase of about $300 because of the expiration of marriage penalty relief that
provides a larger standard deduction for married couples.
Total Tax Increase on this Family if Congress Fails to Act = $2,200
Example 2: A single African-American mother with three young children, ages 11 months to 6
years, working full-time at minimum wage ($14,500 annual income).
A tax increase of $1,725 because the Child Tax Credit will fall from $1,000 to $500 per child,
while the threshold for refundability will be substantially more strict.
A tax increase of $670 because of the expiration of the EITC expansion for larger families.
Total Tax Increase on this Family if Congress Fails to Act = Nearly $2,400
Example 3: An upper-middle-income African-American married couple with a 15-year-old at
home and a 19-year-old in her second year at a public university; the couple’s income is
$120,000.
A tax increase of $700 because, instead of being able to claim the $2,500 American
Opportunity Tax Credit to help with college expenses, they will only be able to claim the
Hope Credit worth $1,800.
A tax increase of $500 because the Child Tax Credit will fall from $1,000 to $500 per
qualifying child.
A tax increase of about $900 because of the disappearance of the 10 percent tax bracket.
A tax increase of $2,400 because of the combination of higher marginal rates and the
expiration of marriage penalty relief that provides a larger standard deduction.
Total Tax Increase on this Family if Congress Fails to Act = $4,500
Example 3: An upper-middle-income African-American married couple with a 15-year-old at
home and a 19-year-old in her second year at a public university; the couple’s income is
$120,000.
A tax increase of $700 because, instead of being able to claim the $2,500 American
Opportunity Tax Credit to help with college expenses, they will only be able to claim the
Hope Credit worth $1,800.
A tax increase of $500 because the Child Tax Credit will fall from $1,000 to $500 per
qualifying child.
A tax increase of about $900 because of the disappearance of the 10 percent tax bracket.
A tax increase of $2,400 because of the combination of higher marginal rates and the
expiration of marriage penalty relief that provides a larger standard deduction.
Total Tax Increase on this Family if Congress Fails to Act = $4,500