Although the headlines suggest that only top earners need to worry about a tax increase next year, the latest reports from the fiscal-cliff front tell a different story. The Washington Post and other media are reporting that President Barack Obama and House Speaker John Boehner have agreed to allow the payroll tax holiday to expire as scheduled on January 1.
If that happens, you won’t be able to take solace in the promises that only those making $200,000 (or $400,000 or $1 million) or more face a tax hike in 2013. In fact, every working American will be hit. Allowing the payroll tax (the levy that pays for Social Security) to rise from 4.2% to 6.2% will cost the average family an extra $1,000 in taxes next year; two-earner couples could owe an additional $4,000 or more.
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