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Wednesday, January 2, 2013

Fiscal Cliff Deal Means Higher Tax Bills For Most Americans

The lights of the U.S. Capitol remain lit into the night as the House continues to work on the "fiscal cliff" on Tuesday, Jan. 1, 2013. (AP/Jacquelyn Martin)

The lights of the U.S. Capitol remain lit into the night as the House continues to work on the “fiscal cliff” on Tuesday, Jan. 1, 2013. (AP/Jacquelyn Martin)

While less than 1 percent of households will face an income tax increase this year under the fiscal cliff plan approved by Congress, a whopping 77 percent will pay more in their Social Security payroll tax.

The payroll tax will increase by 2 percentage points from 4.2 to 6.2 percent on income up to $113,700, affecting 160 million Americans. That means a person making $50,000 a year will shell out an additional $1,000 this year.

The country’s wealthiest Americans will also be paying more. Congress returned the marginal tax rate to 39.6 percent for individuals on income over $400,000 and $450,000 for couples.

But the biggest hit to wealthy Americans comes from part of the bill that restores limits on deductions and exemptions to American families making more than $300,000.

They will still be able to claim the same deductions on income up to $300,000, but income over that amount will face limits in deductions.

But overall, very few households making less than $500,000 will face an income tax increase.

Guest:

  • Binyamin Appelbaum, New York Times

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  • BHA_in_Vermont

    I’m sure glad the Republicans fought to protect 96% of millionaires from an income tax rate increase. Those people hardly have enough to live on.

    I, as a middle class worker, on the other hand will be paying 2% more for Social Security (and I’m not so sure I object – that is just another case of punting the problem down the road for near term “gain”) as well as tax on $3,000 more income than last year even though I won’t have $3,000 more income. Why? The 2013 cap on pre-tax Health Care Savings Accounts drops from $5,500 to $2,500. The co-pay on just 2 of the prescriptions my wife and I need was $1,600 in 2012 and will go up this year.

    Yep, I’m very happy the millionaires won’t have to cut back.

  • Raoul Ornelas

    Chalk up another win, win for the Eric Cantor/Grover Norquist/Mitch (NO!) McConnell/ John Boehner bunch. SOME COMPROMISE! Apparently America is not as broke as the Republicans maintain. Besides we need the money to pay for the new $150,000,000.00 dollar jet aircraft that the defense department needs to satisfy their investors. The Bush/Cheney bunch must be grinning from ear to ear!

    • It

      I agree with the wastful spending part. We are giving 3 billion to Pakistan next year. Thats the country that has the man who really got Bin Laden locked up in jail.

  • BHA_in_Vermont

    Where the heck does Applebaum come up with “Most people will see their taxes go down”? The tax rates aren’t going DOWN for ANYBODY, they just aren’t going UP for most people.

    If you are middle class, you WILL have less money this year than last assuming no income change.  The only people who won’t be paying more tax in 2013 are those like Romney who have no job and therefore do not pay Social Security or Medicare tax.

  • It

    Taxes are going up, spending and the debt ceiling are going up, everyone who pays for health insurance saw that go up, the Fed keeps printing money for bank and auto bailouts making my dollars worth less, Yet Democrats are still saying the Republicans wouldn’t compromise? As a working american I hope they don’t compromise anymore, I can’t afford it.

  • Clara

    This whole 2 month dramatic dog and pony show by the Repugs and Democraps have given the American people higher taxes.
    Thanks for the show boys and girls of the US Congress.
    The scare tactics used and hyped by the mainstream media on a daily basis to keep the massses dazed, confused, frightened, sedated and unhealthy in general.
    Its called MIND CONTROL and it worked again on the dumb sheep.
    Get rid of both these useless parties of parasites.

     “We’ve turned into this nation of overfed clowns, riding around in clown cars, eating clown food, watching clown shows. We’ve become a nation of cringing, craven f*ckups.”  James Howard Kunstler, author of “The Long Emergency”

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