Despite Deal, Taxes to Rise for Most Americans

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  • WASHINGTON (AP) — While the tax package that Congress passed New Year’s Day will protect 99 percent of Americans from an income tax increase, most of them will still end up paying more federal taxes in 2013.

    That’s because the legislation did nothing to prevent a temporary reduction in the Social Security payroll tax from expiring. In 2012, that 2-percentage-point cut in the payroll tax was worth about $1,000 to a worker making $50,000 a year.

    The Tax Policy Center, a nonpartisan Washington research group, estimates that 77 percent of American households will face higher federal taxes in 2013 under the agreement negotiated between President Barack Obama and Senate Republicans. High-income families will feel the biggest tax increases, but many middle- and low-income families will pay higher taxes too.

    Households making between $40,000 and $50,000 will face an average tax increase of $579 in 2013, according to the Tax Policy Center’s analysis. Households making between $50,000 and $75,000 will face an average tax increase of $822.

    “For most people, it’s just the payroll tax,” said Roberton Williams, a senior fellow at the Tax Policy Center.

    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.

    Obama said 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.”

    The income threshold covers more than 99 percent of all households, exceeding Obama’s claim, according to the Tax Policy Center. However, the increase in payroll taxes will hit nearly every wage earner.

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    2 thoughts on “Despite Deal, Taxes to Rise for Most Americans

    1. Love it or hate it Taxes are going up even more than that. Why doesn’t anyone ever ask the question of why our tax code is so complicated. Why does our income get taxed at the federal level. Then we pay taxes again on the money that we have just been taxed on with state sales and income tax.
      I recommend a flat tax. This way we know how much money is being taken from us. Instead of the government hiding the actuall tax burden with layers of taxes.
      Also I strongley recommend that the government only spend what they collect and make it illegal to spend more.
      If I ran my home on the governemt standard the bank would come and take my car and home and I would be living on the street. So I ask you, where do we live when the debters come for america.

      I am a free man not a slave, serf, or peasent, but a citizen of the United States of America

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