Fiscal cliff would shrink paychecks - MyFoxAustin.com | KTBC Fox 7 | News, Weather, Sports

Fiscal cliff would shrink paychecks

Posted: Updated:

Get ready for a smaller pay check if lawmakers can't reach a deal soon on the looming fiscal cliff.

No matter how much money you make, if a deal isn't reached by the end of the year, you will certainly pay more. Experts say the middle class would get hit the hardest.

Because of partisan bickering in Washington, we're getting closer to going over the edge. For the past decade, Americans have paid less in taxes than they did during the 1990s, but at midnight on January 1, 2013, those tax cuts which were extended by President Obama will expire and the old rates will come back. Meaning most Americans will pay 2% more in payroll taxes.

It may not seem like a lot at first, but when you look at the total over one year, for some groups the numbers are astounding. We went to taxpolicycenter.org and used the fiscal cliff tax calculator to see how much more tax payers would have to shell out if lawmakers don't reach a deal.

-A single person making $30,000 a year would see an average increase of $1,046 annually.

Using the same scenario, but upping the salary to $50,000, one would have to pay nearly $1,500 more annually.

If you're married with two children, you will have to pay even more according to tax policy center. Nearly $2900 more if your combined income is $50,000.

Let's say you're married and your combined income is $100,000. Tax policy center says you can expect to pay more than $6300 in additional taxes annually.

Notice married couples with children pay significantly more than single people without dependents.

"Who would really feel the pinch would be the actual middle class people with families with children," Brian Smith, Ph.D. a political science professor at St. Edwards University, says lower and upper class Americans wouldn't get hit as hard.

"The upper class people would pay a lot of new money, but they can afford it. Lower class people obviously would get hit, but their tax burden wouldn't increase by that much," said Smith.

So who's to blame for this situation?

"Both parties really are to blame here, because neither party wanted to address an issue that they knew was coming for an entire year for sake of it then having become an election issue," said Smith.

While there's been a lot of finger pointing, House republican leaders are making a counter-offer to President Obama to avert the fiscal cliff.

It would include $800 billion through tax reform, $900 billion in mandatory spending cuts, and $300 billion in discretionary cuts.

The counter offer would not increase tax rates on upper income Americans, which the white house has said must be included in any deal the president would sign.

Powered by WorldNow

KTBC FOX 7
119 East 10th Street
Austin, TX 78701

Phone: (512) 476-7777
Fax: (512) 495-7001

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | New Terms of Service What's new | Ad Choices