Posted: Dec 28, 2012 7:20 PM by Alex Labat
Updated: Dec 28, 2012 7:20 PM
President Obama held a press conference today on the status of the 'Fiscal Cliff', saying " I just had a good and constructive discussion at the White House with Senate and House leadership about how to prevent this tax hike on the middle class and I'm optimistic we may still be able to reach an agreement that can pass both Houses in time. Senators Reid and McConnell are working on such an agreement as we speak. "
The 'Fiscal Cliff'---500 billion dollars in tax increases and 200 billion dollars in spending cuts---are scheduled to take effect at the beginning of the year.
"The big problem that we see with that is the employer that has to go in and change how he prepares those payroll checks that have to be issued in the first or second week of January...what does he do?", asks John Redd, an accountant at Aresement, Red, and Morella. Redd says middle class workers will be paying a pretty penny if Washington can't work together.
Redd says, "A single guy who makes thirty-five thousand dollars a year who doesn't have any itemized deductions will probably see a tax rate increase of about one-thousand dollars a year."
More than 90% of Americans would see an average tax increase of 5%.
If New Year's Day arrives without a deal, the nation shouldn't plunge into a recession immediately. There still might be time to retroactively repeal the tax increases, as the tax increases are set to phase in over the next ten years.
Redd would just like to see Washington act, saying "What we fear is that they don't do anything because they need to do something."