After weeks of negotiation between policymakers to come to an agreement about the fiscal cliff, Americans now are concerned about the debt ceiling. If the government ties spending cuts to a tax hike, it could mean problems for the middle class.
Since addressing the fiscal cliff, the rich are paying more in taxes. There was discussion about restricting itemized deductions for the rich, but the restriction may not be enough to raise the income balance between spending cuts and tax revenue hikes.
Instead, policymakers are looking toward the middle class taxpayers to raise the revenue. If you recall, the break from payroll tax cuts ended at the beginning of 2013. Once again, employees are paying 6.2% in taxes.
“Eliminating several other major tax breaks could also bring in billions a year in savings for the government, but would amount to tax increases on the middle class people that benefit from them.”
The middle class isn't the only ones that will be effected. Women and single-parents households are having a hard enough time with money management. The United States has the highest percentage of single-parent families among developed countries.
With that in mind, the United States is beginning to be viewed as a struggling, indecisive country when it comes to captial and debt.
The tax breaks that are under review for “tweaking” are tax-deferred pensions and 401K retirement savings, mortgage interest deduction and employer-sponsored health coverage.
Whichever way policymakers decide to vote, the decisions will make an impact to taxpayers.
Bahiyah Shabazz is one of the nation's leading financial experts on the art of maximizing growth, entrepreneur, personal wealth expert, and author of "Spending fast: Clean up your finances in 5 days" and "Finances are linked to emotions: live within your means". Bahiyah Shabazz is also a motivational speaker, columnist, and radio host. If you have questions or topic suggestions please email: contact@BahiyahShabazz.com.