Taxes Climb As Cuts Expireby Gerri Willis
Here come the taxes!
That’s right- no matter who wins the election, or even whether Capitol Hill and the White House can agree on what to do with the Bush tax cuts, the “death tax”, and so on, your tax bill is going to go higher.
The payroll tax cut that was part of the stimulus package ends January 1st. This is no small thing for 163 million working Americans. The rollback of this break will cost the typical worker about $1,000 a year, and a two-earner family with a six-figure income as much as $4,500.
Here’s how the payroll tax that funds Social Security works; it’s funded by a 12.5% tax on wages up to $110,100, and in 2013 it goes up to $113,700.
Typically half of the tax is paid by the employer; the other half by workers. However, for 2011 and 2012, the Obama Administration led the effort to cut workers share from 6.2% to 4.2%. As a result, if you made $50,000, you saved $19 a week. Critics of the break say it was not much more than a sugar high for tax payers, and that the ultimate impact on the economy wouldn’t be much.
Look at what’s passing for a recovery in this country; 23 million Americans unemployed or underemployed, and GDP growth is at 1.3%. You’d have to agree there wasn’t that much there. We have to get back to funding Social Security. The program is already in jeopardy even without this tax holiday. It’s time to get serious again about making sure this critical program doesn’t go unfunded.
However, if the payroll tax cut disappears and the Bush tax cuts expire, the “death tax” comes back with a vengeance. There is no AMT patch; it’s going to be a pretty brutal spring for all tax payers.
It’s time this country got some discipline about its spending and learned how to manage its budget.
We can’t take another four years of avoiding the inevitable. You all know what comes immediately after a sugar high? A pretty nasty headache!