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Deal’s Parameters Spell Higher Taxes

Wall Street Journal (12/19/12) John McKinnon

Nearly all taxpayers would pay more to the federal government next year if President Obama and House Majority Leader John Boehner (R-OH) close the deal they have been negotiating in recent days. Starting the first week of January, higher-income households would face higher individual income-tax rates and tighter limits on deductions and other breaks. Paychecks almost certainly will be smaller—by an average $942 per household for the year, because it appears the two parties will agree to let a temporary payroll-tax holiday expire. The break, instituted for 2011 and 2012, reduced a worker’s share of the Social Security payroll tax to 4.2% from 6.2%. Many lawmakers in both parties have expressed concern about letting it become a recurring drain on government revenue. A pact along the lines being discussed would provide welcome certainty about the tax code, after many years in which a growing number of provisions were enacted temporarily. The talks could still break down, or yield an agreement that can’t pass Congress.