Assuming that pattern holds, the attached chart shows how a future tax bill associated with COVID-19 relief would be distributed. Even with the high progressivity of the current tax code, the bills are extraordinary. For those with incomes between $30,000 and $40,000, the tax hike needed today to pay for the combined stimulus packages would be about $5,000. Those with incomes between $40,000 and $50,000 would pay about $9,000, while those earning between $50,000 and $75,000 would have to fork over $16,000. That rises to $27,000 for incomes between $75,000 and $100,000, and $51,000 for incomes between $100,000 and $200,000. For higher earners, the bills climb so fast that they jump off the chart. The average for Americans with incomes between $500,000 and $1 million is $304,000. A typical American family, with $88,000 of income, faces a bill near $27,000.
And what if the debt is never paid off, just rolled over and added to? The typical American family can expect to receive $350 less in the way of government services or tax cuts, not just this year or next, but forever, just to pay the interest on the debt. That’s if interest rates stay low — the Congressional Budget Office projects an average of 1.3 percent through 2050. With the same rosy assumption, a family with income between $500,000 and $1 million will shoulder $4,000 per year, forever. If you think interest rates will be higher, just take the liability charted above and hit it with the interest rate, and you will have a good guess for how much you will owe.