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Millions face higher taxes real soon without fix

5:57 AM, Dec 17, 2012   |    comments
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WASHINGTON (AP) -- While much of Washington is consumed by the debate over tax increases scheduled to take effect next year, big tax hikes have already gone into effect for millions of families and businesses this year.

More than 70 tax breaks enjoyed by individuals and businesses expired at the end of 2011. If Congress doesn't extend them retroactively back to the beginning of this year, H&R Block says a typical middle-class family could face a $4,000 tax increase when it files its 2012 return in the spring.

At the same time, businesses could lose dozens of tax breaks they have enjoyed for years, including generous credits for investing in research and development, write-offs for restaurants and retail stores that expand or upgrade and tax breaks for financial companies with overseas subsidiaries.

Meanwhile, business economists believe the country will see modest growth in 2013 with strength coming from a further rebound in housing.

In its latest survey of top forecasters, the National Association for Business Economics says it's looking for the economy to grow by 2.1 percent next year after 2.2 percent growth in 2012. That would continue the same tepid growth the country has seen since the Great Recession ended in mid-2009.

Growth at that pace is not strong enough to make a significant improvement in unemployment. The 48 NABE economists believe unemployment will average 7.7 percent for all of next year, right at the level it reached in November.

They forecast growth in the gross domestic product, the economy's total output of goods and services, at 1.6 percent in the current October-December quarter. That would be down from 2.7 percent growth in the July-September period. They believe that part of that slowdown will reflect the disruptions caused by October's Superstorm Sandy.

Associated Press

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