- Ted Cruz thanks Obama for denying visas to terrorists
- Survivors recall chaos, fear in Everest avalanche
- General Mills apologizes for ‘right to sue’ confusion, reverses policy
- Dealer wanted in U.S. for art fraud nabbed in Spain
- Easter morning delivery for space station
- Boxer Rubin ‘Hurricane’ Carter dies at 76
- Probe could complicate Rick Perry’s prospects
- Ukraine, Russia trade blame for eastern shootout
- Obamas head to church on Easter morning
- In Colorado, a pot holiday tries to go mainstream
Biggest tax hit? Look out, Maryland
Family of 4 making $107K would pay $7K more in federal taxes
Maryland taxpayers would be hit with the largest federal income-tax increase in the country if Congress fails to pass legislation to avert the looming “fiscal cliff,” and the average U.S. family of four would pay an extra $3,200, according to a study by the nonpartisan Tax Foundation.
The Washington-based tax research group found that a Maryland family of four making $107,000 a year — the median income for such a family in the state — would pay an extra $7,194 in federal income taxes next year.
Economists say some of the biggest increases in taxes are in the Northeast, in states that voted to re-elect President Obama and where residents earn high incomes and pay comparatively high state and local tax rates.
“The general pattern is basically that high-income states and low-income states are most affected,” said Nick Kasprak, an analyst and programmer at the Tax Foundation who wrote the study. “People would start to see that as soon as January, when their paychecks start getting smaller.”
According to the study, Maryland is joined by New Jersey, Connecticut, Massachusetts and New Hampshire as the five states where a typical family of four would get the biggest federal tax increases, with families paying at least $5,600 more next year. New Jersey families would see a higher percentage increase in income tax than Maryland, but the average dollar increase would be lower because the state’s median income trails that of Maryland.
The next five states are North Dakota, West Virginia, South Dakota, Arkansas and Mississippi, which all favored Republican presidential candidate Mitt Romney this year and have significantly lower incomes than the top five.
The states projected to have the lowest tax increases as a percentage of income were Illinois, Colorado, Kansas, Hawaii and Washington, along with the District of Columbia.
The study used states’ median incomes to consider the effects if lawmakers allow tax cuts enacted under the past two administrations to expire and if they allow changes to the alternative minimum tax that would take away certain deductions and subject many more Americans to higher tax rates.
Mr. Kasprak said the two groups of states at the top — five wealthy blue states followed by five lower-income red states — are vulnerable for different reasons.
The lower-income states would suffer most from the expirations of the Bush-era tax cuts, as federal income-tax rates would increase on all Americans and do so most aggressively on the lowest earners. An end to the cuts also would eliminate the standard deduction for married couples and cut the value of child tax credits.
Federal tax rates also would go up in higher-income states, where a larger portion of their abundant middle classes would become subject to the alternative minimum tax, which was created decades ago to ensure fair payment by high earners but do not adjust for inflation — allowing it to affect more and more taxpayers each year.
For many consecutive years, Congress has “patched” the alternative minimum tax by raising its threshold to protect much of the middle class, but lawmakers have not done so this year.
Jason Fichtner, a senior research fellow for George Mason University’s Mercatus Center, said larger federal tax bills would result all around, and it would be only the beginning for many people.
Elimination of certain deductions would raise the amount of federal taxable income, he said, which in most states serves as the starting point for state and local taxation.
“For the majority of states, they piggyback off the federal income-tax return,” Mr. Fichtner said. “Everybody across the board would see an increase in their taxes.”
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
About the Author
David Hill joined The Washington Times in February 2011 as a Maryland political reporter. He can be reached at firstname.lastname@example.org.
- Md. drivers could face eventual doubling of gas tax
- Federal appeals court restores Maryland's concealed carry law
- Md. bill would end student suspensions for mimicking gun behavior
- Maryland Senate passes bill decriminalizing small amounts of marijuana
- Virginia Gov. Bob McDonnell assailed on transportation
Latest Blog Entries
TWT Video Picks
Women losing coverage under Obamacare, too
- Scalia to students on high taxes: At a certain point, 'perhaps you should revolt'
- Former Ranger breaks silence on Pat Tillman death: I may have killed him
- Special Forces' suicide rates hit record levels casualties of 'hard combat'
- Feds approve powdered alcohol; 'Palcohol' available later this year
- U.S. Navy to turn seawater into jet fuel
- Justice at last: 'Evil woman' outed for grabbing girl's game ball
- CHARLES: Holder's undermining of the law deserving of contempt
- Army goes to war with National Guard, seizes Apache attack helicopters
- Jews being told to register in Ukraine: John Kerry
- EDITORIAL: Republicans finally fight back in phony 'war on women'
Top 10 handguns in the U.S.