President Barack Obama and congressional leaders met Friday at the White House for yet another round of talks, hoping to come to an agreement to avoid going off the fiscal cliff. After weeks of meetings, though, many Americans are wondering what going off the cliff would actually cost them.
According to numbers from CNN Money, Americans who make less than $20,000 a year will have to shell out nearly $600 extra. For middle-income folks who make between $40,000 and $64,000, they’ll see an average tax increase of $2000. Those making more than $108,000 will pay the Internal Revenue Service nearly $13,000 more.
What’s the reason for the hike? Here’s just one example.
“Most of us, what we would see is an increase in the payroll tax. Payroll tax, which funds social security, is 4.2 percent now, and it goes up to 6.2 percent. The cap, so earnings up to $113,700… you’d pay that additional 2 percent,” said Rock Island financial adviser John Miller.
For someone making $50,000, that increase means about $20 less a week in their paycheck. At the grocery store, that $20 could be a gallon of milk, bread, eggs, chicken and a carton of orange juice.
It would be a pinch, no doubt, for many families. Miller, though, said he’s not worried yet.
“We got along okay in the 1990s, prior to the Bush tax cuts. It was just fine, very prosperous era really,” Miller said.
And ultimately, he says it’s not time to panic.
“They don’t take effect on day one. They might impact you in 2014, but it may not be all that bad. So, relax,” said Miller.