FBR’s Mills: Americans Will Pay for ‘Landmines’ in Fiscal Cliff Deal

Monday, 07 Jan 2013 08:06 AM

By Michelle Smith

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
The fiscal cliff compromise, officially named the American Taxpayer Relief Act of 2012, supposedly saved Americans from a serious recession that would have been sparked by a combination of spending cuts and tax increases. The irony is that averting the cliff will still cost Americans — and not just the rich ones.

Financial policy Analyst Ed Mills of FBR Capital Markets tells Yahoo there are three "landmines" in the legislation that will affect all Americans immediately.

Notable among the landmines is the 2 percent hike in payroll taxes that boosts the rate to 6.2 percent.

Video:
Economist Predicts 'Unthinkable' for 2013

Approximately 77 percent of Americans will have higher taxes because of this tax, according to the Tax Policy Center, resulting in $115 billion less in disposable income, the Los Angeles Times reports.

Breaking it down to a more personal level, Mills calculates that the average American will make $80 dollars less per paycheck, meaning this new law costs $40 per week for those paid bi-weekly. And, that's effective immediately.

"Now that we have a deal and have declared victory, the first paycheck that every American receives this year will probably be less than their last paycheck last year," Mills says.

“[The payroll tax cut] was always meant as temporary provision to stimulate the economy when it was weak” said Joe Rosenberg of the Tax Policy Center. “There was very little political support to see it continue,” he tells the Times.

However, it could have been worse, Rosenberg adds.

And for some Americans it is.

Mills points to other costly landmines, such as the sly tax increase that kicks in around the $300,000 level due to a phase-out that will only allow a percentage of certain deductions.

Then there is also the “surcharge on investment income” that will be used to pay for Obamacare. Mills says everyone with incomes above the $250,000 level will pay nearly 4 percent more for their investment income and “there is no way around it.”

Video: Economist Predicts 'Unthinkable' for 2013

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Greenspan: Scottish Independence Would Be 'Surprisingly Negative'

Monday, 15 Sep 2014 19:35 PM

You can add former Federal Reserve Chairman Alan Greenspan to the list of those who think a decision by Scotland to decl . . .

Speculation Swirls Over Federal Reserve Language on Rate Hike

Monday, 15 Sep 2014 14:06 PM

When the Federal Reserve issues a policy statement after it meets this week, the financial world will be on high alert f . . .

WSJ: Tax Crackdown Leads Foreign Banks to Dump American Expats

Friday, 12 Sep 2014 12:28 PM

The U.S. government's tightening of rules to ensure Americans don't skip out on their tax obligations for overseas incom . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved