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By Karoun Demirjian (contact) 
Monday, Dec. 31, 2012 | 4:05 p.m.
Keeping hard-earned money in the pockets of workers, President Barack Obama has been saying, is why it’s imperative Congress makes sure income tax rates don’t rise for the middle class.
“The last thing folks like the folks up here on this stage can afford right now is to pay an extra $2,000 in taxes next year,” Obama said Monday, flanked by about a dozen representatives of the middle class at the White House.
But one tax lawmakers aren’t discussing — the payroll tax — is set to increase at midnight, costing the average taxpayer about $1,000 a year.
Congress has been locked in a fierce debate over rising income tax rates and scheduled government spending cuts, known together as the “fiscal cliff.”
The country will be going over the so-called cliff at midnight tonight, but Congress has a few weeks of wiggle room before workers start seeing larger deductions from their paychecks.
Nowhere in the midst of the debate, however, have lawmakers been arguing over payroll tax cuts, which are set to expire at midnight and stand little to no chance of being resuscitated.
Payroll taxes are a flat tax rate that goes to fund Social Security and Medicare.
Two years ago, lawmakers included a 2 percentage point reduction in the payroll tax rate as part of a larger, two-year tax bill that extended Bush-era tax cuts for everyone.
Before the 2010 deal, payroll taxes were 6.2 percent, deducted from the first $106,800 of workers’ paychecks. Inflation raised that ceiling to $110,100 in 2012.
But for the last two years, the payroll tax rate has been 4.2 percent.
Last December, the White House and Democrats staged a campaign to preserve the expiring payroll tax cut, asking individuals to detail what the average $40-per-paycheck tax hike would mean to them. Over the course of a year, that adds up to about $1,000 lost to taxes.
Congress extended the payroll tax cut for another year.
This year, however, there is no similar campaign under way. The payroll tax cut has not been an element of any of the proposals to avert the fiscal cliff.
In fact, nobody is even talking about the payroll tax cut, and there appears to be a tacit acceptance that it will be expiring, whether a deal is struck or not.
Republicans and Democrats have been sparring over the extent to which income tax rate cuts should be extended.
Democrats wanted to extend Bush-era tax cuts for incomes up to $250,000 and no further, while Republicans wanted to extend current rates at all income levels permanently. Earlier on Monday, Senate Minority Leader Mitch McConnell and Vice President Joe Biden seemed to be closing in on a compromise that would extend the lower tax rates up to $400,000 for individual tax filers and $450,000 for couples.
A final deal would likely also include an extension of unemployment benefits, energy tax credits and tuition benefits that were extended under the controversial stimulus bill, according to the president and aides for McConnell.
It is our fault. We've been spending money we don't have; over extending our credit to the breaking point. Time to pay the piper for everyone. "The tax man cometh."
Actually it's not MY fault
I didn't for the problem in 2008 or 2012.
I voted for the solution both times.
But you are right about 1 thing - it's YOUR fault - you and all the other suckers who voted for Obamanomics not once but twice.
Talk about voting against your own self interest! Did you really believe Obama when he said he would only rais taxes on the RICH?
Guess this payroll tax hike means we are ALL rich now!!
Woo hoo! Happy new year!!
Sorry, newyorkrebel, it is EVERYONE'S fault, not just those who voted for "Obamanomics" but for those who kept in the tea partiers. Guess you haven't been paying attention lately.
Most people seem to have selective amnesia regarding the payroll tax "holiday". It wasn't put in place to be permanent. It is not a tax increase, but simply reinstates the tax to what it was two years ago, as it should be. Overall, everybody working will still be making more per year than if we had actually gone over the "cliff".
Sorry Det_Munch have to disagree. Many did not vote for Obama. Those that voted for Tea Party people did so to try to keep this administrations out of control spending in check. The blame game falls on One persons shoulders. He is in charge and he is supposed to make things work. No more excuses. No more pointing the finger. Thats all we've heard for 4 years. Was it the Tea Parties fault that Reid didn't pass abudget for over 1300 days? The Senate wouldn't even give Obama one single vote on the one he submitted. Sooner or later you'll see that the vote to keep these economically inept people in office was wrong.
Let's cut the crap and tell it like it is: ALL of the so called 'Public Servants', who in theory work for US, are greedy, self serving clowns, and that includes the president and the so called 'leadership' of the senate and the house - on BOTH SIDES OF THE AISLE - they are all loseres and should be replaced by people who will put the good of the country ahead of their self interest and personal well being. This deal is a joke. God help America.
The incentive to vote for Obama will be gone--you already voted. You think the gravy train is still in town? Get ready to pay more for everything. Debased dollar again.
>>>>It is our fault. We've been spending money we don't have; over extending our credit to the breaking point.<<<<<
Please don't include us all in "it is our fault" I for one have NO RESPONISIBLTY in what has been done to our country! None!
It's the government employee unions, low information voters, a leftist news media that's become nothing but a leftist propaganda machine, those that vote for what benefits them personally rather than what is best for our country, a leftist dominated education system that has produced 25 years worth of entitlement minded young people and political parties that promote the dividing of Americans into groups and give candy out to certain groups that they take from other groups and laugh at Americans as they fight bewteen themselves at the expense of our country ,
I had nothing to do with any of this!
First of all it's not a "payroll tax hike", thank you karoun for the misinformation, with the obvious endorsement of this left wing rag.
It's the ending of the F.I.C.A tax reduction, implemented by the obama administration in a weak attempt to stimulate the economy.
Continued propagation of lies supported by main stream media (LV Sun, etal) are not going to solve the serious financial issues this country faces.
Any response, LV Sun, other than to delete my comment?
How about if I apologize for calling you a "left wing rag"...
stopthebs: Headlines are usually not written by the reporter--staff, editors get credit for that.
tomfranklin: I know how you feel. I NEVER have a bill I can't pay in full upon receipt. It sounds like more of not listening to financial advisers--the Suze Ormans who tell you to have a cash emergency fund for 8-10 months, just in case, to pay off your long-term debt, to not incur short-term debt (treasury bills/bonds), to live within your means.