As American workers start to receive their first paychecks of the New Year, they are beginning to notice something: their take-home pay is less than just a few weeks ago. Even those that don’t pay much attention to politics and the blame-game that goes on in D.C., will take notice of the fact that they now have less money with which to pay their bills this month. The payroll tax holiday implemented a two percent payroll tax cut, taking the rate down to 4.2 percent. Without the extension of this tax cut, the rate will now go up to 6.2 percent. This means that anyone receiving a paycheck will see two percent more withheld from their paycheck in federal tax. The Tax Policy Center estimates that approximately 77 percent of Americans will be affected by this tax increase; it will undoubtedly have the most impact upon the lower and middle income wage earners. The average tax increase is expected to be $1257 per year. That breaks down to just over $100 in additional taxes being withheld each month. For many middle income families, that amount is equal to what is spent on a week of groceries or filling up the car with gas to get to and from work for a couple of weeks.
Republicans reluctantly gave in to the idea of tax hikes on the “wealthy,” with the notion that the tax issue is behind us. Republican Senator, Mitch McConnell, said on ABC's "This Week With George Stephanopoulos" yesterday,
"The tax issue is finished, over, completed. That's behind us. Now the question is what are we going to do about the biggest problem confronting our country and our future, and that's our spending addiction."
That is not necessarily what the Democrats have in mind though. House Democratic leader Nancy Pelosi also took advantage of the Sunday news shows format to further explain her party’s agenda regarding taxation and spending. During her interview with Bob Schieffer on CBS's "Face the Nation" she said,
"We're talking about looking at the tax code, putting everything on the table from the standpoint of closing loopholes, and we know that we can do that.”
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