As I write this, talks are still continuing on Capitol Hill to work out a deal to avert the "fiscal cliff" combination of tax-cut expiration and sequestration cuts set to go into effect without congressional action with the new year.
Like most things in this town, an 11th-hour agreement has been reached. It probably won't be passed until tomorrow, but does it even guarantee tax relief? Here's a piece from the Washington Post about how higher taxes are coming tomorrow anyway with the expiration of a payroll tax holiday.
The deal negotiated by Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) addresses a separate tax -- the income tax -- and would prevent tax rates from increasing for all but the wealthiest Americans. But both sides have decided to leave the payroll tax out of the agreement.
Unlike income taxes, which rise along with a worker's income, the payroll tax is a fixed percentage of an employee's salary. Allowing the tax cut to expire increases taxes on salaries by 2 percent for every American worker. Up to $110,100 a year in salary is subject to the tax.
This jump in payroll taxes, combined with other tax increases affecting the very wealthy as a result of the deal, would make for the largest increase in taxes in about half a century.
With the country going over the fiscal cliff for at least a day because Congress did not approve the deal before the year-end deadline, a wide range of taxes go up Tuesday, although perhaps only for a matter of hours. If lawmakers ultimately fail to approve the tentative agreement, it would mean thousands of dollars would come out of the pockets of average workers, the largest tax increase on Americans since World War II.
If you haven't been following the fiscal cliff drama, here's a sampling of the arguments from each side.