Expiration of Bush Tax Cuts Would Cost Families Thousands in 2011, Study Shows

(AP Graphic)

Millions of families will be faced with thousands of dollars in tax increases if the Bush tax cuts are allowed to expire at the end of the year, according to estimates from the nonpartisan Joint Committee on Taxation.

A preliminary report obtained by Fox News shows that several tax increases would hit hard if Congress does nothing to minimize the damage before Dec. 31.

The study found that raising just the lowest income tax rate from 10 percent to 15 percent would cost 88 million taxpayers an average of $503 next year.

Lowering the child tax credit from $1,000 to $500 per child would cost 31 million families an average of $1,033 in 2011; the reinstatement of the so-called marriage penalty, a peculiarity in the tax code that forces some married couples to pay more for income tax than they would if they were single, would cost 35 million couples an average of $595 each, according to the preliminary numbers.

Those changes are among a slew of tax increases that are scheduled to go into effect if Washington does not act.

Income tax rates will rise for almost every bracket, with the bottom rate going from 10 to 15 percent and the top rate going from 35 percent to 39.6 percent. Dividends and capital gains taxes also are expected to rise.

The Obama administration, though, is pushing a plan to extend the income tax cuts for middle-class families while letting tax breaks for the top 2-3 percent of income earners expire.

Treasury Secretary Timothy Geithner said on ABC's "This Week" on Sunday that the plan is the "responsible" route, arguing that it shows a commitment to reining in the deficit. The administration estimates that eliminating the top-tier tax break would save the government nearly $700 over the next decade.

A few prominent Democrats have questioned whether Congress should selectively halt some tax cuts, as Republicans claim ending the tax cuts for the top tier will hammer small businesses.

Democratic leaders, though, say the economy can spare higher taxes for the wealthy and plan for a showdown over the issue before November.