Now that Congress has extended the president’s requested Payroll Tax Holiday, America may want to spend it while they got it. Without significant tax code changes, in 2013, America is scheduled to get hit with what would be the largest tax increase in our history.
Not only will the $1,000 per year tax holiday for a $50,000 income household disappear, come 2013 all Americans will see the tax on their first $8,700 of income jump from a 10% rate to 15% rate.
That hike will cost the majority of filers an additional $435.
For those eligible for child care tax credits that deduction will drop from $1,000 to $500. The marriage penalty will roar back into effect. The AMT, alternative minimum tax, will finally kick in.
Roll those changes up and a family filing as married with two children making $50,000, will see their taxes increase by basically $2,700.
Conservative economists claim a complete repeal of the Bush Tax rate combined with ending the Payroll Tax Holiday would cause a reduction in available personal net disposable income of $500,000,000,000. To be reasonable, progressive economist factoring in a combination of Bush Tax extensions into the 2013 code predict only a $357 billion increase.
The above facts should not be considered as GOP “scare tactics.”
You would be hard pressed to find a political lobbying organization that isn’t fighting to extend tax credits for families and repeal of the AMT for the poor. What these core facts do represent is a tax policy question tens of millions of Americans continue to await debate upon by both those running to secure the GOP nomination and President Obama himself.
For some reason both parties are running away from an issue affecting all Americans. They continue to frame the tax policy issue in terms of how it would affect the most affluent.
Yet this stance makes no sense at least to the majority. Seventy three percent of Americans, including 64% of registered Republicans, acknowledge the necessity of increasing the tax burden on millionaires and billionaires.
While support drops into the high 50% range when tax increases are considered for those making as little as $250,000, a majority in America agree somebody needs to pay more. Conversely less than 13% of registered voters favor increasing the tax obligations on the middle class at alone our least affluent economic demographic.
The only thing this American is left to assume is neither party is representing the interests of the majority. Unless I’m missing something, come 2013 no matter who is president, the middle class and the poor are about to get hit with the largest tax increase in our nation’s history
So my advice is, “Spend it while you got it.”