As the deadline approaches, we are hearing more and more about the fiscal cliff which involves the billions of tax hikes and spending cuts scheduled to take effect in early 2013 as a result of the super-committee’s failure to come to a budgetary deal last fall. It was designed to involve tax hikes and spending cuts so that both political parties would have motivation to come to a compromise. The size of the cuts and hikes is quite large which is very important given the still fragile nature of the economic recovery. Original estimates saw an impact of $600 billion for both actions together but now some newer calculations put the tax increase along at having a roughly half a trillion dollar impact. Indeed, according to a new study from the Urban Institute and the Urban-Brookings Tax Policy Center, the tax increase that would result from the fiscal cliff actually happen equates to some $536 billion. This adds up to nearly $3,500 per household. Here are the components from which the study put together their numbers:

Estimated tax increases (numbers are rounded):

• Payroll tax: $115 billion
• Health-care law provisions (new taxes): $24 billion
• High income capital gains and dividends: $8 billion
• High income rates and exemption and deduction phase-outs: $44 billion
• Stimulus legislation’s earned income tax credit, child tax credit, and American Opportunity education tax credit: $27 billion
• Extenders (temporary cuts, mostly for business): $75 billion
• Estate tax: $31 billion
• Remainder of 2001-03 tax provisions: $171 billion
• Alternative minimum tax patch: $40 billion
• TOTAL:  $536 billion

Businessweek continues, “It would raise federal tax collections by a fifth from what they would have been without the cliff. The study—”Toppling Off the Fiscal Cliff: Whose Taxes Rise and How Much?”—doesn’t analyze the automatic-spending-cut part of the fiscal cliff, which amounts to more than $100 billion in 2013. The combination would be enough to knock the entire, fragile U.S. economy back into recession, estimate many economists. The truth is that Washington probably won’t allow all the tax increases to take effect. On the other hand, it probably will let some of them take effect. So the cliff’s effect will be less than half a trillion dollars but greater than zero. The study’s authors—Roberton Williams, Eric Toder, Donald Marron, and Hang Nguyen—have provided a public service by breaking the cliff down into nine stages. Think of them as ridges on the way to the valley floor…”