- The George W. Bush-era tax cuts are scheduled to expire, raising rates on investment income, estates and gifts, and earnings at all levels.
- The marriage penalty for joint filers re-activates.
- The value of the child credit will drop from $1,000 to $500.
- The rate everyone pays on the first $8,700 of wages will jump from 10 percent to 15 percent.
- The Social Security payroll tax will pop back up to 6.2 percent from 4.2 percent under the deal approved on Feb. 17, 2012 by Congress.
- New Medicare taxes enacted as part of President Obama’s health-care initiative will for the first time strike high-income households.
The Washington Post reports that “the potential shock to the nation’s pocketbook is so enormous, congressional aides have dubbed it ‘Taxmageddon.’ Some economists say it could push the fragile U.S. economy back into recession, particularly if automatic cuts to federal agencies, also set for January, are permitted to take effect.”
Whether “Taxmageddon” arrives may be up to the voting public and the outcome of the 2012 Presidential election.
For full article see: ‘Taxmageddon’ looms at end of payroll tax holiday – The Washington Post.
- Payroll Tax Cut Extended For 2012: Increase 401k Contributions? (mymoneyblog.com)
- Congress Figures Out How To Finance A Payroll Tax Cut: Borrow The Money (forbes.com)
- Why Congress actually failed on payroll tax (csmonitor.com)