Fiscal Cliff Deal – 77 Percent Of All Americans Set To Pay More Taxes

Fiscal Cliff Deal

The President has claimed that the Tuesday night fiscal cliff deal will reduce middle class taxes in America. However, taxes for most Americans will increase in 2013. The tax relief that has been built into the package will add nearly $4 trillion per year for the next 10 years to the existing $16 trillion debt. The fiscal cliff deal passed by the Senate and the Congress will not stop the Social Security payroll tax cut from expiring. This means that more than 75 percent of American households will face a higher federal tax liability in 2013.

President Barack Obama signs the executive ord...
President Barack Obama signs the executive order creating the Middle Class Task Force at the White House. (Photo credit: Wikipedia)

Tax Policy Center’s analysis indicates that families with annual income between $40,000 and $50,000 will have to pay $579 extra middle class taxes in 2013. For those earning between $50,000 and $75,000, the liability will increase by $822. Individuals earning more will have to shell out higher taxes. The Bush era tax rates for individuals earning less than $400,000 and couples earning less than $450,000 have been extended. Those earning more will pay tax at a higher rate.

The highest tax rate will increase from 35 percent to 39.6 percent. Those who fall in the highest tax bracket will have to pay a higher rate of investment taxes at 20 percent. Obama’s health care law could also increase the tax outflow of high income families. Investments of individuals earning more than $200,000 per year and couples earning more than $230,000 per year will attract a new 3.8 percent tax.

According to Tax Policy Center, families with annual income between $500,000 and $1 million will have to pay $14,812 extra tax in 2013. Those earning more than $1 million will have to shell out an additional $170,341. Obama tried very hard to include the payroll tax cut for 2011 and wanted to extend it through 2012. However, Democrats and Republicans were not keen and both agreed to let the cut expire.

Wages as high as $113,700 pay a 12.4 percent Social Security tax. Employers pay half and workers pay the other half. The latter’s share was cut from 6.2 percent to 4.2 percent for 2011 and 2012. This will result in middle class taxes savings of about $1000 a year.

The fiscal cliff Congressional battles have just begun. Over the next few weeks, fiscal cliff agreements relating to debt ceiling and automatic spending cuts affecting the Pentagon will be hammered out. Democrats will continue to push for tax hikes while Republicans will demand spending cuts and entitlement reforms.

Santorum Taxes And Tax Plan, A New Road Or Another Detour

Rich Santorum won the Iowa caucuses and has positioned himself as a front-runner. One candidate surges ahead and then dramatically drops down in the polls. The American voter appears uncertain when it comes to choosing a candidate for the GOP nomination. The Santorum 2012 taxes and overall tax plan require closer attention. The United States deficit and rising unemployment continue to be the hot topics in this race.

The Santorum tax plan it is estimated would cut taxes by one-trillion by 2015. A higher the deficit the will lower the value of the American dollar. He promises to cut taxes for individuals making forty-thousand or more a year. His plan would increase the overall spending power of the average American, by increasing their incomes by lowering their tax rates. His plan would create two tax brackets of ten percent and twenty percent. He would lower capital gains taxes to twelve percent from fifteen percent and increase the child exemption for individuals threefold. The biggest tax breaks would go to corporations that would pay around seventeen and a half percent, which is half of what they currently pay. Companies based in the United State would not be required to pay any taxes. This tax measure allegedly would encourage companies to invest in home based industries.

Santorum’s tax plan is designed to increase the nation’s economic growth, but it is based on systems that have not reduced the deficit or increased employment. Giving Companies substantial tax cuts and incentives has not reduced the deficit, or created more jobs. The nation deserves a better tax plan.