NBC NEWS: Households Could Face Average $3,500 Tax Hit If Congress Can’t Avoid ‘Fiscal Cliff’

Source: Tom Curry / NBC News

Nearly 90 percent of Americans will see their taxes increase in 2013 if Congress and President Barack Obama can’t find a way to renew tax policies that are scheduled to expire at the end of this year, the nonpartisan Tax Policy Center said in a report issued Monday.

The average tax increase will be $3,500 per household if the current tax policies expire, the report estimated.

It isn’t necessarily an all-or-nothing decision Congress confronts – it could choose to extend some of the tax provisions but terminate others – but it’s precisely the complexity of picking and choosing from the items on the menu that will make bargaining difficult as the days dwindle down to Dec. 31.

At stake are several different tax provisions enacted at different times by different Congresses and presidents, some provisions as old as the estate tax, which began in 1916, and some as new as the temporary reduction in the Social Security payroll tax. In 2010, Congress lowered the payroll tax rate from 6.2 percent to 4.2 percent but it is set to revert to the higher rate on Jan. 1.

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