Investors’ dividends would be taxed at the rate of ordinary income taxes, instead of the current 15 percent.

Capital gains would increase from 15 percent to 20 percent.

“The dividend tax increase alone is almost cataclysmic,” Kevin Hassett, an economist with the free-market research center the American Enterprise Institute, warned Congress on Thursday, saying it might spark a recession.

The child tax credit would be cut in half, to $500 per child under the age of 17. The child- and dependent-care credit, as well as the earned-income credit for poorer taxpayers, also would shrink.

DEBT CEILING

Sometime later this month, the federal government is expected to bump up against the $16.3 trillion limit on outstanding federal debt, called the debt ceiling. The debt comes from spending already approved by Congress.

For the next two months, the Treasury Department can move money around to keep paying its creditors who bought Treasury bonds.

Republicans insist they’ll pass a new debt ceiling, allowing the government to borrow to pay what it now owes, only if steep spending cuts are agreed on.

Absent a deal, there would be debt default.

In August 2011, similar negotiations went to the wire and resulted in Standard & Poor’s downgrading the credit rating of the U.S. government.

If its competitors Moody’s Investors Service and Fitch Ratings do the same early next year, it might disrupt financial markets.

Many pension funds, endowments and other big institutional investors would, under their charters, have to divest of U.S. government bonds that aren’t AAA rated.

PAYROLL TAX

The payroll-tax holiday, first passed in 2010, reduced to 4.2 percent from 6.2 percent the percentage of worker’s pay, up to $110,100, that’s subject to the tax that helps finance Social Security and Medicare.

In 2012 that translated into a $700 tax cut for a person who makes $35,000 a year and a $2,202 tax cut for workers who earn $110,100 or more.

Ending the cut for 160 million American wage earners would translate into $95 billion in additional tax revenue for government coffers in 2013.

HEALTHCARE TAX

Under the Affordable Care Act — which some call Obamacare — a surtax of 3.8 percent will be tacked on to investment income for individual filers whose modified adjusted gross incomes exceed $200,000 — $250,000 for joint filers — starting Jan. 1.

ALTERNATIVE

MINIMUM TAX

The alternative minimum tax is a parallel tax enacted in the 1960s to stop the wealthy from skirting taxes through deductions.

It was never indexed to inflation, so income that was considered huge back then isn’t so huge today.

Congress has “patched” the AMT repeatedly but it didn’t do that for 2012 income. If no bill is passed to patch it by Dec. 31, it might hit 31 million people when the April 15 tax-filing deadline arrives and taxes on 2012 income are due.

The estimated cost of a one-year patch is $85 billion. Taxpayers most at risk are couples filing jointly with two or more children, and whose income falls between $75,000 and $500,000, especially those with income above $200,000.

‘DOC FIX’

Doctors face cuts in Medicare payments as high as 27.4 percent.

For more than a decade, the Medicare system’s funding formula has failed to match its spending, regularly leaving Congress to choose between providing additional money or cutting reimbursement to physicians.

Congress has opted for a patch dubbed the “doc fix,” providing additional money to ensure that doctors aren’t cut off and Medicare recipients don’t suffer.

Last year’s one-year patch cost $19 billion.

Erika Bolstad, Michael Doyle and Rob Hotakainen contributed to this report.

Email: akumar@mcclatchydc.com, khall@mcclatchydc.com; Twitter: @anitakumar01, @kevinghall.