Huge tax increase looms at year-end ‘fiscal cliff’

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The expiration of cuts on capital gains and stock dividends is a key reason why wealthier people would see a higher increase in their tax burdens.

Republicans controlling the House have also called for the expiration of Obama-backed tax cuts for the working poor, including expansions of the earned income and child tax credits.

But all sides are calling for the renewal of Bush-era tax rates for everyone else. Without a renewal of those rates, a married couple would pay a 28 percent rate on taxable income exceeding $72,300 instead of the 25 percent rate they now pay. And the 10 percent rate paid on the first $8,900 of income would jump to 15 percent.

The new top rate of 39.6 percent would kick in for income over $397,000. The current top rate is 35 percent rate.

The Tax Policy Center is a joint project of the Urban Institute and the Brookings Institution.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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