Some lawmakers are back in Washington, cutting their holiday short to work out a plan before the fiscal cliff deadline. But, if no compromise is reached, people could see a big hit to their paycheck.
While all the recent talk about the fiscal cliff has many wondering what it's going to mean for them, a local financial expert said it breaks down to an extra $19 to $20 a week from the average person's paycheck.
When Joe Williams of Commerce Trust looks ahead, he doesn't see a cliff, but rather a slow drain on people's paychecks.
He believes Congress will reach a deal in the next month to extend tax cuts for people making less than $250,000. Williams said regular people will still take a hit in 2013.
"We'll see the payroll taxes going up, I think that's pretty much of a given," he said.
The payroll taxes could be going up about 2 percent and, for someone making $50,000 a year, that means an extra $19 to $20 a week.
To put that amount of money into perspective, one needs to only think of a weekly trip to the grocery store. That's a gallon of milk, plus eggs, chicken, bread and another gallon of orange juice.
But Williams said it's not all bad news.
"Right now there are some things actually going right for the consumer, prices coming down," he said.
Prices are down at the pump right now. But, when someone considers they could be losing about $20 a week, that could drain the difference.
"Whenever we start taking more income out of people's paychecks, that's less they can spend," Williams said.
Some businesses are wondering what might happen to them if people don't have as much discretionary or disposable income.
"I really am not anticipating that it's going to be a huge jolt for us," said Vivien Jennings of Rainy Day Books in Fairway, KS.
Jennings said her bookstore had a record holiday sales season. Now she just has to figure out how to pay her employees come Jan. 1, since tax rates are so up in the air.
"I'm just taking it one step at a time. It can be daunting and it can be fearful, but I've decided I'm going to eat the elephant one bite at a time," she said.
The Income Tax Bureau is telling employers to use this year's rates for the first few paychecks in January, but that could mean people's taxes will jump later on. House leaders could begin voting as early as Sunday night, giving them 24 hours to reach a deal.
The plan on the table extends income tax cuts for families making less than $250,000.
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Tuesday, July 22 2014 10:00 PM EDT2014-07-23 02:00:37 GMT
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