More bad news from the fiscal cliff.
While taxes will increase now on those making $250,000 $450,000, the truly substantial tax increases will come on the middle class via the expiration of the payroll tax cut:
The payroll tax cut that boosted paychecks for millions of Americans over the past two years has expired.
Early Tuesday morning, the Senate passed a deal Tuesday to avert the feared fiscal cliff on an 89-8 vote. The Senate package would put off budget cuts for two months and preserve Bush-era income tax cuts for individuals earning less than $400,000 or couples earning less than $450,000.
The House is expected to vote on the bill today or Wednesday.
However, the payroll tax holiday introduced under President Obama in 2010 was not included in the deal and technically expired at 12:01 a.m. Monday. Should this benefit not be renewed, 125 million households will see their paychecks shrink, according to the Tax Policy Center…
Should the payroll tax cut not be renewed, the Social Security payroll tax rate would revert from 4.2% to 6.2% on the first $113,700 in earnings.
The payroll tax cut is not included in Obama’s plan according to the White House. If this is not fixed taxes will go up on middle class workers immediately.