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By  Hayley Peterson

PUBLISHED: 00:00 EST, 3  January 2013 |  UPDATED: 06:25 EST, 4 January 2013

 

Middle-class workers will take a bigger hit  to their income proportionately than those earning between $200,000 and $500,000  under the new fiscal cliff deal, according to the nonpartisan Tax Policy  Center.

Earners in the latter group will pay an  average 1.3 percent more – or an additional $2,711 – in taxes this year, while  workers making between $30,000 and $200,000 will see their paychecks shrink by  as much as 1.7 percent – or up to $1,784 – the D.C.-based think tank  reported.

Overall, nearly 80 percent of households will  pay more money to the federal government as a result of the fiscal cliff  deal.

Middle-class workers will take a bigger hit to their income proportionately than those earning between $200,000 and $500,000 under the new fiscal cliff deal,Middle-class workers will take a bigger hit to their  income proportionately than those earning between $200,000 and $500,000 under  the new fiscal cliff deal,

Nearly 80 percent of households will pay more money to the federal government as a result of the fiscal cliff deal 

Nearly 80 percent of households will pay more money to  the federal government as a result of the fiscal cliff deal

‘The economy needs a stimulus, but under the  agreement, taxes will go up in 2013 relative to 2012 – not only on high-income  households, as widely discussed, but also on every working man and woman in the  country, via the end of the payroll tax cut,’ said William G. Gale, co-director  of the Tax Policy Center.

‘For most households, the payroll tax takes a  far bigger bite than the income tax does, and the payroll tax cut therefore – as  [the Congressional Budget Office] and others have shown – was a more effective  stimulus than income tax cuts were, because the payroll tax cuts hit lower in  the income distribution and hence were more likely to be spent,’ he  added.

When the deal was passed by Congress late  Tuesday, President Obama said it prevented ‘a middle class take hike that could  have sent the economy back into recession’ and have a ‘severe impact’ on  American families.

‘Under this law, more than 98 percent of  Americans and 97 percent of small businesses will not see their income taxes go  up,’ he said.

To the contrary, the Tax Policy Center says  roughly 70 percent of Americans will see their income taxes rise as a result of  the deal. They won’t rise as much as they would have if no deal had been reached  and the fiscal cliff was triggered, but they will go up nonetheless.

 

While the lower brackets will take a bigger hit to their paychecks than those in the $200,000 to $500,000 bucket, their overall federal tax rate will remain smaller 

While the lower brackets will take a bigger hit to their  paychecks than those in the $200,000 to $500,000 bucket, their overall federal  tax rate will remain smaller

The average increase in tax bills for all  earners will be about $1,257.

While the lower brackets will take a bigger  hit to their paychecks than those in the $200,000 to $500,000 bucket, their  overall federal tax rate will remain smaller. And the biggest hit of all will  still be felt by the nation’s top income earners.

Obama made a tax hike on the nation’s  wealthiest central to his campaign for re-election.

Workers making more than $1 million will pay  an average 7.8 percent more – or an additional $170,341 – under the new  law.

The federal tax rate will be roughly 39  percent for that group, compared to 26 percent for those earning between  $200,000 and $500,000 and 14 percent for those making between $40,000 and  $50,000.

The average increase in tax bills for all earners will be about $1,257 

The average increase in tax bills for all earners will  be about $1,257

 

Workers making more than $1 million will pay an average 7.8 percent more - or an additional $170,341 - under the new law 

Workers making more than $1 million will pay an average  7.8 percent more – or an additional $170,341 – under the new law

 

Read more: http://www.dailymail.co.uk/news/article-2256972/Middle-earners-hit-hardest-revealed-workers-making-30-000-bigger-hit-earning-500-000-new-fiscal-deal.html#ixzz2H5GfXBi4 Follow us: @MailOnline on Twitter | DailyMail on Facebook

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