I’ve heard a few of the TV talking heads – and even a few politicos – suggesting that the “fiscal cliff” is really nothing to be concerned about. I beg to differ – strongly.
The President Says….
The Republicans say….
The folks uttering those “no big deal” type comments publicly aren’t the rank and file, hard working Americans that live in my neighborhood.
Here’s what we, the lowly middle and lower class, are looking at:
1) There was a two percentage point reduction, from 6.2% to 4.2%, in the payroll tax from wages paid in 2011 and 2012. This reduction expires on December 31st, resulting in the employee social security tax rate increasing to 6.2% for wages paid beginning on 1/4/13.
2) Tax cuts enacted during the Bush administration are set to expire at year’s end, as well. Not only will the 10% income tax bracket end and revert to 15%, the other brackets will jump up to 28%, 31%, 36% and 39.6%.
3) A new .9% Medicare withholding tax will apply to upper income workers.
4) Currently, some companies provide tax free educational assistance under a tuition reimbursement plan. That previously free benefit will be taxed beginning January 1, 2013.
5) The maximum child tax credit drops from $1,000 to $500, thus significantly reducing your dependent deduction allowance.
6) The supplemental wage withholding rate will jump up to 28%.
And that’s just the beginning. Wait until Obamacare costs are adjusted as cost overruns and low cost estimates are revealed to be far higher than initially written.
Without even factoring in Obamacare, we’re facing the largest single-year tax increases in the history of the country.
Democrats are famous for telling us how terrible a President George W. Bush was, but you’ll note that most all of the current tax rates are the result of his work – even with Democrat support, in some cases. Come the first payday in January, 2013, they just may look back and say “that Bush fella’ wasn’t so bad afterall”. I’ll not hold my breath waiting, however.
And the very worst part of all this?
They’ve had at least two YEARS to resolve this problem.