Compare that figure with the 2.8 million American households that would be affected by the tax hike for income exceeding $250,000, while only 368,000 households would be impacted with tax hike for income exceeding $1 million.
The tax holiday expiration should not surprise America because from the very beginning, President Obama stressed that it was just temporary. The measure was an initiative to create a stimulus for the economy.
Upon expiration, tax rate would revert back to 4.2% to 6.2% for the first $113,700 of earnings. For someone receiving $100,000, that would mean a paycheck cut of $167 per month or about $2,000 annually. Workers earning $50,000 would see a paycheck cut of $83 a month or $1,000 annually. Those earning $30,000 would see their paycheck drop by $50 a month or $600 annually.
Some of the amounts may seem negligible. But they create a huge impact for low-income earners. Workers who are earning the $15-per-hour minimum wage would absorb the greatest impact. They earn $400 per week and 2% of that goes to taxes.
For workers expecting a raise in 2013, a huge part of the raise would be eaten by taxes. It is estimated that the average wage hike next year would be somewhere around 2.9%. For those earning $50,000, a raise of $1,450 would end up in a net increase of $450. A raise of $2.900 for those earning $100,000 would get a net increase of $900.
The bottom line of everything would be the anticipated reduction in consumer spending. When people earn less, they spend less. The American economy should be ready to absorb the significant losses in trading.