Whatever you paid the feds in taxes last year, you’ll most likely pay more in 2013. That’s because the fiscal cliff deal cut by Congress and President Obama allows tax provisions that benefited almost all American workers and their families to expire.
To folks outside of Washington, this means President Obama and Congress raised your taxes. But because of technicalities with how spending and tax policies are counted inside the Beltway, the politicians are going to tell us they cut our taxes. Don’t believe it.
In all, this deal will raise taxes by more than $600 billion over the next 10 years. A large portion of that will come from tax increases on “the rich”: families making more than $450,000 a year or individuals making more than $400,000 a year.
But the middle class did not escape the fiscal cliff unscathed. They’ll pay more in 2013 because Congress allowed an increase of the Social Security portion of the payroll tax. Congress and President Obama originally agreed to lower that tax rate from 6.2 percent to 4.2 percent back at the end of 2010 for just one year (2011). They then agreed to extend it for 2012. Letting that rate go back up will hurt middle class checkbooks.
The tax increases on “the rich” (most of whom are small-business owners who aren’t incorporated) won’t hit many middle class pockets directly, but they will hit the middle class indirectly. Indeed, the tax hikes will affect Americans at every income level, because they will slow the economy. Slower economic growth will reduce opportunity, job creation, and wage growth. ...
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