What will the tax hikes of January 1, 2013, mean to real Americans?
Let’s say you are a black woman who has a rewarding, though extremely challenging, career as a registered nurse. You’re nearing retirement—you’re 58, living in the Miami-Fort Lauderdale metropolitan area. After working hard for several decades, you and your husband have worked your way up to a total family income of more than $200,000.
Your estimated tax hit from Taxmageddon: approximately $21,200, according to figures from The Heritage Foundation’s Center for Data Analysis (CDA).
These numbers are based on a real person in the IRS’s anonymous database, expressed as a range of a total family’s adjusted gross income. Heritage Research Coordinator Patrick Tyrell, along with Dan Roberts and CDA Director Bill Beach, examined the cost of Taxmageddon to average Americans in a variety of locations across the country. The CDA analysis is based on a range of adjusted gross incomes and Zip codes of residents. (For more on Heritage’s methodology, see the end of this post.)
Earlier this year, Heritage calculated a broader impact cost for several groups, based on average income:
The number $500 billion is rather large and abstract, so The Heritage Foundation has broken down the expected tax increases per person just for 2013:
- Families with an average income of $70,662: tax increase of $4,138
- Baby boomers with an average income of $95,099: tax increase of $4,223
- Low-income workers with an average income of $24,757: tax increase of $1,207
- Millennials with an average income of $23,917: tax increase of $1,099
- Retirees with an average income of $42,553: tax increase of $857
The new numbers show our above-average income baby boomer getting socked with increased taxes at a rate nearly five times the average.
** Heritage Foundation analysts performed calculations using a database supplied by the Internal Revenue Service (IRS). This database details 2008 income tax statistics according to income classification and ZIP code. Heritage used estimates of federal tax changes for various income levels to guide the estimate of tax changes for similar incomes at the Zip code level. The statistics were summed up to create state totals. Heritage analysts linked IRS income data to population data taken from the Census Bureau’s detailed sample of the 2010 Census, using income ranges to create profiles that also included such details as race, sex, and occupation.