The Washington Post has published a three part series in the paper titled, “Homes for the Taking.” The series is essential reading for urban planners, community development practitioners, and people interested in urban real estate issues. In Part One, “Left With Nothing,” the authors chronicle Bennie Coleman, a senior with dementia, who lost his home over a missed $134 property tax bill. Washington, DC sells delinquent tax bills to private companies that then take over charging interest and foreclosure proceedings. Mr. Coleman’s $134 debt ballooned to $4,999 in the hands of the private lender, who foreclosed on him and then sold the house for $71,000 months later. Many of these companies charge unreasonable interest and fees and push people out of homes. Policy makers need to be sure that their tax collection systems don’t cause more harm than good just to make up a small amount of unpaid taxes.
With less than 12 hours to go, there is not a deal to avoid the fiscal cliff, but like most negotiations, it seems like something will happen. We may avoid the cliff, but even if we do, almost everyone’s taxes will go up. The payroll tax (a different tax from income tax) has been in holiday for years and the payroll tax holiday is likely to expire. Negotiations have not focused on extending this break as well.
A family making $50,000 will have taxes increase about $1,000 through the payroll tax. The Washington Post has the details.
The reintroduction of payroll tax is not nearly the tax increase if we go over the cliff, but don’t expect that a deal will mean that your taxes will be equal to 2012. The moderate increase in government revenue can help begin to deal with debt and lagging service spending without the level of disruption that the “cliff” scenario tax hikes could bring.
Lawmakers are down to the wire in negotiating a deal to avoid the “fiscal cliff.” What does it exactly mean for individuals, households and families? The Tax Policy Center (a joint venture between the Brookings Institute and the Urban Institute) has an in depth calculator where you can compare your taxes based on the different plans that are being discussed. The Washington Post has also used the calculator to project a number of typical family scenarios (as well as a few extremes).
Almost every situation leads to higher taxes on everyone, but some situations are worse than others. If you are wondering what will happen without a deal or with one of the current proposals take a look!