Sat Nov 24, 2012, 02:21 PM
FarCenter (17,316 posts)
Social Security and income tax increases coming in 2013
Taxes go up in 2013 for 163 million workers
WASHINGTON (AP) — President Barack Obama isn't talking about it and neither is Mitt Romney. But come January, 163 million workers can expect to feel the pinch of a big tax increase regardless of who wins the election.
A temporary reduction in Social Security payroll taxes expires at the end of the year and hardly anyone in Washington is pushing to extend it. Neither Obama nor Romney has proposed an extension, and it probably wouldn't get through Congress anyway, with lawmakers in both parties down on the idea.
Even Republicans who have sworn off tax increases have little appetite to prevent one that will cost a typical worker about $1,000 a year, and two-earner family with six-figure incomes as much as $4,500.
'Fiscal cliff': Alternative minimum tax could blindside millions in middle class
The best hope for a deal to avoid the "fiscal cliff" may lie with the alternative minimum tax, an obscure provision of the tax code that is about to become alarmingly relevant to millions of middle-class taxpayers.
Unless Congress acts by the end of the year, more than 26 million households will for the first time face the AMT, which threatens to tack $3,700, on average, onto taxpayers' bills for the current tax year. Because those people have never paid the AMT, they have no idea they are in its cross hairs — put there by a broader stalemate over tax policy that has kept Congress from limiting the AMT's reach.
Note that the AMT patch expiration will affect the 2012 tax return due April 15, especially middle-class taxpayers with mortgages and high tax bills in states like NY and CA.
4 replies, 1213 views
Social Security and income tax increases coming in 2013 (Original post)
|Wounded Bear||Nov 2012||#3|
Response to FarCenter (Original post)
Sat Nov 24, 2012, 02:24 PM
democrattotheend (7,445 posts)
1. This needs to get some attention
I don't think the payroll tax cuts were ever designed to be permanent, but Congress ought to consider making them permanent. I would rather see income tax rates go up at the lower levels but payroll taxes go down, since the poorest workers pay payroll tax as well as the middle class.
Response to democrattotheend (Reply #1)
Sat Nov 24, 2012, 03:33 PM
FarCenter (17,316 posts)
4. The Christmas shoppers who are spending based on current take home pay will get a shock 1/1/13
Their take home pay will be cut by the increase in Social Security payroll taxes.
They might spend more prudently if they were aware that this tax hike was coming.