Many long-standing tax breaks are set to expire at the end of the year, forming the proverbial "fiscal cliff." If lawmakers do not deal with the problem soon, states a new report, most Americans will be paying more in taxes next year. That consists of the average American household. Source of article:

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Issue with financial cliff

06/u-s-competitiveness-ranking/">fiscal cliff</a> could be a huge issue. The typical household will pay an additional $3,500 in taxes during the year if something is not done, according to the report.

According to the report:

<blockquote>"The fiscal cliff threatens an unprecedented tax increase at year end."</blockquote>

<strong>Too many tax provisions around</strong>

Donald Marron is the Tax Policy Center director who pointed out that the number of temporary tax provisions are exceedingly high and are snowballing together.

At the end of the year, the Bush era tax cuts are set to expire. Simultaneously, some $109 billion in automatic <a href="https://personalmoneynetwork.com/personal-loans/" mce_href="https://personalmoneynetwork.com/personal-loans/">spending</a> cuts will kick in. The accumulation of these events is called the financial cliff.

The debt ceiling argument last year led to the automatic spending cuts. The “super committee” never discussed the best way to deal with the debt in our country.

At the end of the year, the two percentage point temporary payroll tax cut will end. Also, child tax credits will decrease from $1,000 per kid to $500. That will happen as part of the end to the Bush-era tax cuts. Also, wage and investment income tax breaks for married filers with kids will end.

<strong>Americans see more tax increases</strong>

About 90 percent of Americans will need to deal with tax hikes if legislators do not affect the events.

Medium-earning families -- those with income between $40,000 and $64,000 -- will see an increased tax burden of $2,000 for 2013, according to the study. Upper-middle earners, who make north of $108,000 annually, will be paying about $14,000 more.

The one percent, or highest earners in the nation, will see a $120,000 increase in taxes, though a family making $110,000 will only pay $6,000 more.

Over $500 billion in extra revenue would be added to the government with the tax increases. About 60 percent would come from the top 20 percent of earners. The top earners will even end up having to pay taxes on additional things that low income earners do not deal with, such as stock dividends and tax cut reversal

<strong>Avoiding double-dip recession</strong>

More than that, economists warn legislators that not addressing the fiscal cliff prior to the end of the year will likely put the country into a new recession.

<strong>Sources</strong>

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<a href="http://www.dailyfinance.com/2012/10/01/how-looming-tax-hikes-would-hit-typical-families/" mce_href="http://www.dailyfinance.com/2012/10/01/how-looming-tax-hikes-would-hit-typical-families/">Daily Finance</a>

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