Despite reaching a fiscal cliff deal that will shield 99 percent of Americans from an income tax increase, more than three quarters of American households will still face higher federal tax bills in 2013. That’s because legislators failed to renew a temporary reduction in payroll taxes, worth about $1,000 to a worker earning $50,000 a year.
But that’s not the only bad news for consumers’ pocketbooks. Regardless of the tax package Congress finally cobbled together Tuesday, a bevy of products Americans use every day are about to get pricier, according to experts.
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Here’s a look at some items consumers will probably paying more for in 2013:
1. New cars: More stringent fuel-efficiency standards enacted by the Obama administration are making engines more expensive to produce, which in turn translates into costlier cars, according to consumer deals site Dealnews.
The sticker price on the Toyota Camry will go up $175 this year and the 2013 Lexus CT 200h will be almost $3,000 more expensive than last year’s model.
2. Groceries: Remember the drought this summer that scorched the nation’s farming regions? Thanks to the brutal dry spell, food prices are expected to rise as much as 4 percent in 2013, the United States Department of Agriculture says, which translates into an extra $40 a month in food costs according to some estimates.
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A scarcity of corn caused livestock feed prices to spike, forcing farmers to cut back herd sizes to keep costs in check. With less supply of beef, poultry, and milk-producing cows, your next visit to the butcher’s counter and dairy cooler is likely to be a bit pricier.
Cereal and other bakery products will rise, too, according to experts. Lower wheat yields on account of the drought have crimped supply and driven prices up. The USDA expects prices for those items to creep up by as much as 3.5 percent in the coming year.
“I explained to them a month ago that if Obama gets in office that the regulations for Obamacare are gonna hurt our business, and I’m gonna have to make provisions to make sure I have enough money to cover the payroll taxes, the additional health care I’m gonna have to do, and I explained that to them and I said you do what you feel like in your heart you need to do, but I’m just letting you know as a warning this is things I have to think of as a business owner.
I guess he proved something?
If Donald Rumsfeld were caught campaigning for George W. Bush on government time — which happens to be a violation of federal law — it would have been front-page news for a month. But after the US Office of Special Counsel reported that Kathleen Sebelius was guilty of campaigning for Democrats in her official capacity as health and human services secretary, it would have taken a team of hounds to find the buried notices. Network news and major newspapers pretty much shrugged and bought the administration’s party line: Nothing to see here; please move along.
In a way, you have to marvel at the press corps’ collective determination not to cover something. The White House press secretary wasn’t even asked about Sebelius’ lawbreaking until a week after the fact.
The media do a great job of not covering what they don’t want to cover. And even when they make the effort — as with the endless replays of Mitt Romney’s “47 percent” tape — they find a way to avoid the substance. The video story quickly became a tale about who filmed it, who leaked it, and whether the campaign had lost momentum. At all costs, reporters and analysts avoided the basic issue: Should we be bothered by the fact that nearly half of American taxpayers pay no income taxes at all? Is it a problem that a roughly equal number receive direct benefits from the federal government?
Hoping to cut the debate off at the pass, liberals are quick to point out that these figures omit payroll tax payments. But payroll taxes are unique; they are dedicated to funding Medicare and Social Security independently from the rest of the budget. In fact, the universality of those taxes is one reason the corresponding programs enjoy broad and bipartisan support.
Payroll taxes do not fund national defense, national parks, or education. Payroll taxes do not support VA hospitals, food stamps, the EPA, or thousands of other programs. A worker who pays nothing in income taxes has little vested interest in how much we spend on these programs and whether it is wasted.
This is not a question of taxing the elderly or working poor. Set aside these groups, and more than half of the non-income-tax-paying public remains. The argument isn’t that everyone in this group should pay high taxes; it’s that many should be paying something. Throughout the 1990s the number of filers paying no income taxes remained below 35 percent.
Mitt Romney painted an inaccurate portrait of the “47 percent of Americans [who] pay no income tax” when he spoke — and was secretly videotaped — at a May fund-raiser depicting almost half the country as Obama-loving “victims” who feel entitled to government handouts.
Romney’s statistic accurately approximates the percentage of US households that do not pay federal income taxes. But he went on to suggest that this 47 percent relies on government help and refuses to “take personal responsibility” — an assertion that ignores the fact that most of these households pay payroll taxes for Social Security and Medicare and some are service members in combat zones.
Almost every American adult pays some combination of excise, property, sales, and state or local income taxes.
And contrary to Romney’s assertion that these are “people who will vote for the president no matter what,” many Americans who pay no federal income taxes are members of important Republican voting blocs — including seniors and residents of the Bible Belt.
“It’s empirically not accurate,” said John G. Geer, a political science professor at Vanderbilt University. “There are plenty of people who don’t pay federal income taxes who will support him, but he was trying to appeal to the folks in the room.”
Romney was filmed without his knowledge during a $50,000-per-plate dinner in Boca Raton, Fla., on May 17. The liberal magazine Mother Jones obtained footage of the event, posted excerpts and part of the video on its website on Monday, and released the full video of Romney’s remarks on Tuesday.
Last week, after a needlessly-contentious process, Congress approved a two-month extension of the payroll tax break. As part of the agreement, a conference committee will try to come up with an agreement to extend the cut through the end of 2012.
I’ve been rather pessimistic about the likelihood of success, and yesterday, the odds got worse.
The Senate Republican leader announced Friday that he had chosen three of his colleagues to try to thrash out a bipartisan deal on payroll taxes, unemployment benefits and Medicare.
The three Republican senators will join four Democratic senators and 13 House members on a conference committee wrestling with the issues, which tied the Senate in knots for more than two months.
The newly named Republican conferees are Senators Jon Kyl of Arizona, Michael D. Crapo of Idaho and John Barrasso of Wyoming.
These aren’t three senators you’d appoint to a conference committee if you want to be constructive. These are three senators you’d appoint to a conference committee if you want to be destructive.
The House on Tuesday passed a bill combining an extension of the payroll tax cut with several GOP-favored provisions, including language to speed a decision on the Keystone XL oil sands pipeline, setting up a showdown with the White House, which has threatened to veto the measure.
The measure passed late Tuesday on a 234-to-193 vote. Ten Democrats joined 224 Republicans in backing the measure, while 14 Republicans and 179 Democrats voted “no.”
All eyes are now on the Senate, which has twice this month shot down competing payroll tax measures offered by Democrats and Republicans. Senate Majority Leader Harry Reid (D-Nev.) reiterated Tuesday afternoon that the House GOP plan is “not going to pass over here” and said that he is “hopeful” leaders will huddle together to craft a compromise on paying for the extension and other measures.
“The only way you’re going to get something done over there is get some Democratic votes,” Reid said. “The only way I can get anything done over here is get some Republican votes. That seems to scream for compromise, and I believe that’s what we need to do.”
The House Republican plan would extend for one year the reduction from 6.2 percent to 4.2 percent in payroll taxes for employees; it also would renew the “doc fix,” which prevents cuts in reimbursements to doctors who see Medicare patients, and would extend unemployment insurance, while gradually reducing the maximum length of time for benefits from 99 to 59 weeks.