Obama administration lays out fiscal cliff's impact for Blacks.
President Obama walks with Treasury Secretary Timothy Geithner after speaking about the fiscal cliff at a business roundtable. (Photo: AP Photo/Charles Dharapak)
THE WHITE HOUSE
The Middle-Class Tax Cuts’ Impact on AFRICAN-AMERICAN FAMILIES
President Obama is committed to growing our economy from the middle out by ensuring a strong, secure, and thriving middle-class. Now we face a deadline that requires action on jobs, taxes and deficits by the end of the year. While the President is committed to working with Congress to reduce our deficit in a balanced and responsible way, there is no reason to hold middle-class families hostage while we debate tax cuts for millionaires and billionaires.
MIDDLE-CLASS AFRICAN-AMERICAN FAMILIES CAN’T AFFORD TAX INCREASES
— A median-income African-American-headed family of four (earning around $53,000) could see its income taxes rise by $2,200.
— 99 percent of African-American families who make less than $250,000 a year would not see an income tax increase under the President’s plan.
- — In addition, roughly 2.0 million working African-American families and roughly 3.4 million African-American children would continue to benefit from the President’s improvements to the Child Tax Credit and Earned Income Tax Credit (EITC).
AFRICAN-AMERICAN FAMILIES HELP DRIVE CONSUMER SPENDING, GROWTH, AND JOBS
The bulk of economic activity comes from American families buying basic necessities like clothing and healthcare; durable goods like cars and furniture; and the food and gifts that millions will enjoy over the holiday season.
— Over the course of this year, American consumers are on pace to spend around $5 trillion on retail sales. And with the start of the holiday shopping season, which accounts for close to one- fifth of retail industry sales nationwide, retailers can’t afford the threat of tax increases on middle-class families.
—The retail industry employs around 15 million Americans and has been a key part of the recovery. In the 40 months since the recession ended in June 2009, the retail industry alone has been responsible for more than 9 percent of overall employment growth and has added 438,000 jobs in the past 32 months. About 1.7 million African-Americans are employed in the retail industry.
RAISING TAXES ON THE MIDDLE-CLASS WILL HURT AFRICAN-AMERICANS AND THE U.S. ECONOMY
The US economy can’t afford that right now. New analysis by the President’s Council of Economic Advisers (CEA) finds that: 2
— Nationally, this sharp rise in middle-class taxes and the resulting decline in consumption could slow the growth of real GDP by 1.4 percentage points.
— Faced with tax hikes, CEA estimates that consumers nationwide will likely spend nearly $200 billion less than they otherwise will in 2013.
EXAMPLES OF MIDDLE-CLASS FAMILIES THAT WILL SEE THEIR TAXES RISE IF THE MIDDLE-CLASS TAX CUTS ARE NOT EXTENDED
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.
(Source: The White House)
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