Off the fiscal cliff: White House details how a dive would affect West Virginians
CHARLESTON, W.Va. -- In an apparent attempt to pressure Congress, the White House late Wednesday released state-by-state analyses of the financial implications if the federal budget goes off the "fiscal cliff" next month.
According to the "Impact for West Virginia" report, some 600,000 households in the state would pay higher income taxes, if tax breaks such as the expanded child tax credit, marriage penalty relief, lower tax brackets, and a tax credit for college tuition are allowed to expire on Jan. 2.
A middle-class family of four would pay an additional $2,200 in federal income taxes, according to the White House analysis:
• The reduction in the child tax credit from $1,000 to $500 would cost the family with two children $1,000.
• Merging the 10 percent tax bracket into the 15 percent bracket would mean a tax increase of $890.
• Elimination of the marriage penalty relief, which provides a higher tax deduction for married couples, would increase the family's taxes by $310.
Additionally, according to the report, about 38,000 West Virginia families would no longer be able to claim the American Opportunity tax credit, which provides a credit of up to $10,000 over four years to help cover tuition and other college expenses.
For small businesses, the tax deduction for new investment would be reduced from the current $250,000 maximum to $25,000.
The report cites an analysis by the National Economic Council concluding that the higher tax burden would result in a $200 billion reduction in consumer spending nationally in 2013.
Consumer spending by West Virginians would fall by $1.1 billion, the report concludes.
With consumer spending accounting for about 70 percent of the nation's economic activity, "retailers from big chains to mom-and-pop small businesses would be affected," the report states.
"This is an important moment, not just to avoid the fiscal cliff -- but to lay the foundation for an economy that will support a healthy middle class, restore economic certainty, and lead to long-term job growth," the report concludes.
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