On Cyber Monday, the White House released a report detailing the effect of ending middle class tax cuts by going over the fiscal cliff on consumer spending. The report, from the National Economic Council and the Council of Economic Advisers, finds that consumer spending could drop by close to $200 billion in 2013 from tax hikes alone.
From the report:
Allowing the middle-class tax rates to rise and failing to patch the Alternative Minimum Tax (AMT) could cut the growth of real consumer spending by 1.7 percentage points in 2013. This sharp rise in middle-class taxes and the resulting decline in consumption could slow the growth of real GDP by 1.4 percentage points, which is consistent with recently published estimates from the Congressional Budget Office.
Faced with these tax hikes, the CEA estimates that consumers could spend nearly $200 billion less than they otherwise would have in 2013 just because of higher taxes. This reduction of $200 billion is approximately four times the total amount that 226 million shoppers spent on Black Friday weekend last year. As Figure 5 shows, this $200 billion reduction would likely be spread across all areas of consumer spending.