WASHINGTON — A stalemate in Congress is threatening to bring a tax increase to than 160 million workers on Jan. 1, and 1.8 million more people will lose unemployment insurance the same day.
The tax increase comes from a sunset provision in a payroll tax cut that has not been renewed. It’s the part of your paycheck you see as FICA.
The money taken out goes into the Social Security Trust fund. It had been cut from 6.2 percent to 4.2 percent and the lack of Congressional action puts the rate back to 6.2 percent.
If means the average American worker making $50,000 a year will now pay $1,000 more in taxes or about $20 a week.
The money will go into the Social Security Trust fund as originally designed.
For those unemployed, the inaction by Congress could be even tougher. People who are past the initial 26 weeks of benefits will be cut off. They will get no more unemployment checks. That affects every state across the country.