Middle-income Americans face a relatively modest increase in their overall taxes under the budget plan coalescing in Congress, squeezed mainly by higher levies for gasoline and other consumer goods.
Tax payments by those earning between $30,000 and $100,000 a year - comprising the largest segment of the population - will generally rise 2 percent or less, according to preliminary figures compiled by the House Ways and Means Committee.By comparison, those earning $200,000 or more annually face an overall tax hike of 6.4 percent, accounting for $8.4 billion of the $18.5 billion in increased tax revenue the deficit-reduction package is expected to generate.
Although the proposed gasoline tax hike is smaller, it still poses a burden for the middle class, along with increases in taxes on alcoholic beverages, cigarettes, airline tickets, and, to a lesser extent, luxury items such as furs and jewelry.
In addition, middle-income elderly will be pinched by cutbacks in Medicare as they are required to pay higher premiums with higher deductibles.
The proposal to set the maximum tax rate for capital gains at 28 percent - down from 33 percent - will have virtually no effect on middle-income earners. "Middle-income people don't have capital gains," said Bruce Fischer, research director for Citizens for Tax Justice.
At the upper end, middle-income taxpayers will be hit by new limits on itemized deductions and by the increase in the amount of income subject to the 1.45 percent payroll tax for Medicare, said Norman Ture, president of the Institute for Research on Economics of Taxation.