When considered as a percentage of the size of the nation’s overall economy, the increase in taxes set to occur Tuesday is likely to be largest in about 50 years, according to a study of previous tax policy changes by Jerry Tempalski, a tax analyst in the Treasury Department.
Payroll taxes last went up in 1988, when they increased by 0.72 percentage points.
Some very small tax increases have taken effect in recent years, including an increase in levies on cigarettes to pay for expanded health care for children and a tax on tanning salons to pay for Obama’s health-care plan. Clinton raised taxes in 1993, but that mainly affected the wealthy. (By contrast, state and local taxes have been increasing over the years, in part to make up for budget shortfalls caused by the recession.)
Middle-class Americans will not only be wrestling with higher taxes this year; they will also be earning less than they did just five years ago.