The expiration of the payroll tax cuts as well as rising food prices, both expected within January, will play a huge roll in tax hikes in 2013. This will cause about 0.8% in a cut in economic growth for the year. According to a poll conducted by Reuter’s, the US economy is expected to expand only 2% in 2013 compared to 2012’s 2.1%. Consumer groups’ advice for Americans? Cut back on debt, closely monitor your retirement savings and conserve gas whenever possible.
JP Morgan economists predict that a 2% cut in the payroll tax, which is expected to expire in January, would most likely reduce household spending by around $125 billion. The cut would also lower the nation’s GDP (gross domestic product) by .6% in 2013. Congress plans on working hard to limit the impact of the oncoming tax hikes. If no action is taken, the United States could experience the largest tax increases since those used to fund the Vietnam War in 1969.
If you would like more information about the process of growing taxes and how to prepare for them, contact McAllen’s accounting experts at Gonzalez & Arrambide, Inc. at 956-447-9009.