The Tax Foundation reports that the federal tax bill of the average middle-income family in Iowa will go up over $1,600 if the Bush-era tax cuts expire as scheduled December 31.
There must be some mistake. We've been hearing that those tax cuts only went to "the rich." But the Tax Foundation says that is the affect their expiration will have on the average family in the middle 20% of the income distribution:
By the term "average middle-income family," we are referring to the average of the families in the middle 20 percent of the income distribution. This is different from the "average family," which would have a much higher income level than the "average of the middle-income families," given the skewed distribution of income.
Technically, we analyze the difference between the average tax bill under both expiration and extension for the middle 20 percent of families within each state and congressional district. Note also that by using "family," we have restricted the universe to those arrangements with two or more people. In other words, singles are excluded from this analysis, whereas any married couple family (with or without children), single parent family, or household with related people living together is included. A more detailed methodological summary is provided at the end of the report.
For my congressional district, IA-3, the average savings for the average middle-income family is $1,639.
The items included in the Tax Update Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation.
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to