Local financial expert weighs in on "Fiscal Cliff"

(WFRV)- Another issue staring down the Obama administration is the "fiscal cliff."

Many are asking: what's it all about?

The fiscal cliff - is more than $500 billion in tax increases and spending cuts that take effect January 1, unless the president and lawmakers can find an alternative plan for reducing the deficit. Talks on the subject get underway tomorrow at the White House, it appears both sides want to extend Bush-era tax cuts now in place, that help 98% of Americans, making below $250,000 a year.

How to address the ultra rich, the top 2%, who the President says need to pay more, is going to be a tougher negotiation.

But financial advisor Henry Koehne says another important part of the fiscal cliff that no one's talking about - is the future of the "payroll tax holiday " first enacted in 2011.

The payroll holiday, now in its second year, has provided 160 million workers with about $1,000  a year in extra cash, by reducing what they pay into social security. It's scheduled to end December 31.

"It's a 2% reduction in taxes on social security and the first $110,000 dollars in income, so on a duel income family that could be over $4,000 dollars in tax reductions," Koehne says.

Koehne says ending the payroll tax holiday, could mean the loss of $80 a week for a dual income family.

With the U.S economy still shaky, he and many in Washington feel removing this disposable income from worker's pockets, would be a bad idea.