Arizonans would be hit hard by fiscal cliffPosted: Updated:
Time is running out for Congress and the president to avoid the fiscal cliff.
If lawmakers can't reach an agreement by Jan. 1, an assortment of tax hikes and spending cuts will kick in, that some say will trigger another recession.
John Mathis is a professor of global economics and finance at the Thunderbird Global School of Management.
He told CBS5 that every Arizonan would be impacted by the fiscal cliff.
"That would cause Arizonans to be much more conservative in their spending until some sort of clarity comes forth from what's going to happen to taxes," said Mathis.
As it stands now, if the fiscal cliff's tax increases kick in, the average taxpayer's income tax will go up around $3,500.
If you make less than $20,000 a year you'll pay close to $600 more in taxes.
If you make between $40,000 and $64,000 your taxes go up around $2,000.
If you make more than $108,000, expect to spend more than $13,000 in added taxes.
Also, if the 2 percent payroll tax holiday disappears, someone making $50,000 a year will take home about $83 less per paycheck.
"They probably are not going to change their spending habits, but definitely not going to spend extra," said Mathis. "That negative would cause sales in Arizona to fall and sales tax revenue to fall."
The fiscal cliff's spending cuts would also hit Arizona particularly hard, with billions of dollars slashed from the military.
That would impact Luke Air Force Base and surrounding aerospace and defense businesses.
According to a George Mason University study, that could result in the loss of 35,000 jobs and a $3 billion hit to Arizona's economy.
"We do have a significant dependence on military expenditure," said Mathis. "We have to see how it all plays out."
Head Start programs and subsidized child care would also take a hit if the U.S. hits the fiscal cliff.
Lawmakers are currently scrambling to get a last-minute deal done.
Copyright 2012 KPHO. (Meredith Corporation) All rights reserved.