Both the Bush-era tax cuts as well as the payroll tax break are set to expire. Even the Federal Reserve Chairman Ben Bernake recently warned Congress of the dangers of Taxmageddon on the U.S. economies and U.S. families. If the tax cut expirations are not addressed by Congress, then U.S. taxpayers will have to pay $310 billion more in 2013. Families of four making about $70,000 a year will experience a tax increase of about $4,100.
While many people believe that these tax numbers will only affect people earning more than $250,000, they will not. There are middle income families that will be affected by both the payroll tax break expiration as well as by the reduction of the child tax credit from $1,000 back down to $500. Bernake said, "Recovery could be endangered by the confluence of tax increases and spending reductions that will take effect early next year if no legislative action is taken."
At this point, Congress does not seem to be anywhere near taking any type of action on this situation. If not, then the U.S. taxpayers will end up paying. The solution is certainly not to simply continue wide-spread tax cuts across the board. However, the solution is also not impose wide-spread tax increases across the board either. Politicians need to actually work together to make sure that they don't hurt Americans who are struggling the most.