Tax Hike to Devastate US Economy

November 26, 2012 Taxation in USA

White HouseWASHINGTON D.C. – Allowing tax cuts on personal incomes to expire in the USA would have wide reaching detrimental effects on the national economy and would hamper the country’s economic growth.

On November 26th the US White House released a new report on the potential economic effects of tax increases on the national economy, claiming that US taxpayers “…can’t afford the threat of tax increase on middle-class families.”

According to the report, the USA needs to ensure that the tax cuts which are currently offered to middle income taxpayers are extended by the end of the year, as allowing them to expire this year would effectively raise the tax obligations for approximately 98 percent of American taxpayers, and would lead to a USD 200 billion reduction in consumer spending and a 1.4 percent slowdown in consumer spending.

The economic slowdown will be felt across all industries in the country, and would also have secondary effects life shaking consumer confidence and increasing uncertainty on the financial markets.

The US President and the Congressional Democrats are currently proposing that tax cuts should be extended to all households with incomes below USD 250 000 per year.

Photo by R Toth