Despite all of the hoopla about us being able to avoid the so-called 'fiscal cliff', don't think for a second that you're taxes won't be going UP this year! And by a lot! Even if you're below that magic threshold of $400,000, you'll see less in your paycheck in the coming months. Because even though we may not have taken that big plunge over 'fiscal cliff', for now, the only thing that was accomplished is the delaying of the inevitable. And for those of you naïve enough to think that just because the debate is subsiding and may now be asking if that means higher taxes for middle class Americans are a thing of the past, the answer to that is — not exactly. Because while the tax package that Congress passed New Year’s Day will protect 99 percent of Americans from an 'income tax' increase, most will still end up paying more in federal taxes in 2013 and beyond.
But how can that be, you ask? Well, it's pretty simply really. Because, you see, the legislation did absolutely nothing to prevent what was the 'temporary' reduction in the Social Security payroll tax from expiring. Remember how, way back in 2012, that 2-percentage-point cut in the payroll tax was worth about $1,000 to a worker making $50,000 a year? Well that now no longer is in effect. And now the Tax Policy Center, an outfit described as being a nonpartisan Washington research group, estimates that 77 percent of all American households will now face higher federal taxes in 2013 under the little agreement that was negotiated between Barry and Senate Republicans. And I hate to be the bearer of bad news here, but while high-income families will feel the biggest tax increases, many middle- and low-income families will end up paying higher taxes too.
And we keep hearing about how things could have been oh so much worse, that the tax increases could be a lot higher. A huge package of tax cuts first enacted under President George W. Bush was scheduled to expire Tuesday as part of the "fiscal cliff." The Bush-era tax cuts lowered taxes for families at every income level, reduced investment taxes and the estate tax, and enhanced a number of tax credits, including a $1,000-per-child credit. The package passed Tuesday by the Senate and House extends most the Bush-era tax cuts for individuals making less than $400,000 and married couples making less than $450,000. Barry continued to make the idiotic claim that the deal "protects 98 percent of Americans and 97 percent of small business owners from a middle-class tax hike. While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country."
While the income threshold covers more than 99 percent of all households, exceeding Barry’s claim, according to the Tax Policy Center, the increase in payroll taxes will hit nearly every single wage earner. Social Security is financed by a 12.4 percent tax on wages up to $113,700, with employers paying half and workers stuck paying the other half. Barry and Congress reduced the share that was to be paid by workers from 6.2 percent to 4.2 percent for 2011 and 2012, saving a typical family about $1,000 a year, but that is no longer in effect. And while Barry pushed hard to enact the payroll tax cut for 2011 and then to extend it through 2012, it was never fully embraced by either party, and this time around, there was general a general consensus to simply let it expire. So expect to see a little less in your paycheck every week.
The new tax package would increase the income tax rate from 35 percent to 39.6 percent on income above $400,000 for individuals and $450,000 for married couples. Investment taxes would increase for people who fall in the new top tax bracket. High-income families will also pay higher taxes this year as part of Obama’s 2010 health care law. As part of that law, a new 3.8 percent tax is being imposed on investment income for individuals making more than $200,000 a year and couples making more than $250,000. Together, the new tax package and Barry’s health care law will produce significant tax increases for many high-income families. For 2013, households making between $500,000 and $1 million would get an average tax increase of $14,812, according to the Tax Policy Center analysis. Households making more than $1 million would get an average tax increase of $170,341
But look, this is only the tip of a much bigger 'tax' iceberg. Rumor has it that Barry fully intends to mount another assault come the spring, in the form of yet another request for higher income taxes. The general feeling among most Democrats is that Americans, all Americans are severely under taxed. Now I'm not sure if Democrats view those who are currently paying no income tax as being in that category, but most definitely those of us that are currently paying taxes, do. So if you're one of those who are now pretty satisfied that those evil rich are finally being made to pay what is a little closer to their fair share, I wouldn't be too happy about that fact. Because it's gonna be sooner rather than later that you too are going to be forking over more cash to the government. It won't be long before Barry's gonna be telling you to bend over and spread 'em, and to take it like a man. And that it'll only hurt a little bit.
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