APPLETON, Wis. (WFRV) While many tax breaks have been extended in the deal, increases to Social Security will likely be felt by most Americans. Contributions are set to jump 2%, which reverts back to the tax rate of two years ago.
December was a busy month for Certified Public Accountant Dave Kamps, with many clients worried about the impending fiscal cliff. "People learn to spend money a lot quicker than they do to save. It's going to be an adjustment for them this year."
With a deal finally agreed upon, Kamps says a catastrophe has been averted. But most households will still end up paying more. The Education credit, Earned Income credit and Child Tax credit have all be extended for five years. But the Social Security Tax will return to its previous rate of 6.2%. Experts predict stability in the tax code, could have more positive benefits than just strengthening Social Security. Because some businesses plan years in advance for tax payments, many had put off hiring new employees until the fiscal cliff was resolved.
"There has not been a shortage of people coming in and looking for work - which is kind of sad," says Kelly Rousseau, the President of ServPro of the Fox Cities. He sees other lingering issues - like the government avoiding spending cuts and the shrinking value of the dollar - as problems that will face many Americans sooner rather than later. "It's sad. It's really sad. The state of this country is not what it should be."
But the owner of the Green Gecko Grocer and Deli in Appleton's City Center views Tuesday's deal as a step in the right direction. Robert Wall opened his shop at the height of the recession. He's been paying close attention to lawmakers in Washington the last few months: "I think both sides are starting to recognize we really need to work together and solve problems rather than bicker at each other."
Government spending cuts were not part of Tuesdays deal. The financial experts we spoke with worry this is just a way for law makers to "kick the can" further down the road, and avoid tackling an even larger issue.
