$2,200 Tax Hike For Family of 4

FOR THE RECORD: This story misidentified the organization that tax policy expert JD Foster is affiliated with. He is with the Heritage Foundation.

WASHINGTON — The White House estimates that plunging over the so-called “fiscal cliff” would raise income taxes about $2,200 a year for a New Mexico family of four with a median income of $60,400.

The White House late Wednesday released state-by-state data estimating the additional tax burden middle-class families would incur if congressional negotiators can’t agree on a mix of spending cuts and revenue increases before Dec. 31. In the absence of a deal, $1.2 trillion in budget cuts and across-the-board income tax hikes would take effect on Jan. 1.

The tax data are part of the Obama administration’s attempt to pressure Republicans into making a deal. The numbers were generated by the National Economic Council and the Council of Economic Advisers.

“While the president is committed to working with Congress to reduce our deficit in a balanced and responsible way, there is no reason to hold the middle-class families in New Mexico hostage while we debate tax cuts for the highest income earners,” the White House said in a news release.

But JD Foster, a tax policy expert at the conservative Brookings Foundation in Washington, said the White House is missing the point by not offering enough spending cuts.

“The problem is spending, not taxes,” Foster said. “This whole debate about raising taxes on the rich has nothing to do with the fiscal imbalance and everything to do with distracting the nation from the real issue — too much spending.”

House Majority Leader John Boehner and other Republicans argue that raising taxes on the highest-earning Americans could slow the economic recovery and job growth because of the impact on small-business owners.

Obama has suggested extending personal income tax cuts for all Americans, except families earning more than $250,000 and individuals making more than $200,000, but Republicans oppose any income tax hikes.

The White House said 99 percent of New Mexico families make less than $250,000 and that threats of tax hikes after Dec. 31 could slow the holiday shopping season.

The White House also said the retail industry employs 89,000 New Mexicans.

The Council of Economic Advisors estimates that consumers in New Mexico could spend nearly $1.2 billion less than they otherwise would have in 2013 because of higher taxes if Congress fails to reach a budget deal before Dec. 31.
— This article appeared on page C1 of the Albuquerque Journal