Thursday, December 20, 2012

Taxes to go up $1,000 a year for the typical American household in January

This will affect all workers, even the ones whodon't pay or owe any federal income tax. President Obama wanted to give money to the 47% of the country that doesn't pay federal income taxes, but vote democrat.  The mechanism for that reward was a 2% cut in the Social Security tax taken out of workers paychecks. Social Security is already financially unsound long-term. This tax cut  has to go away.

 Via WSJ:
Neither the Obama administration nor congressional Republicans want to increase taxes on everyone, but most workers are likely to see lower take-home pay in 2013, eating away at economic growth.

The White House, in its latest offer Monday to resolve the fiscal cliff, made a key concession that would be felt by every U.S. wage earner: allowing the expiration of the payroll tax cut, a provision that has lowered the workers’ share of Social Security taxes by two percentage points for the past two years. That translates into an average tax increase of about $1,000 a year for the typical American household making about $50,000 annually.

Letting the payroll tax rate revert to 6.2% from the current 4.2% would raise government revenue by about $125 billion next year, equivalent to 0.8% of total U.S. economic output, according to J.P. Morgan Chase.

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