Without a deal on the fiscal cliff most of us will notice a pretty significant change in our paycheck beginning Jan. 1.
Going over the cliff would affect 88% of taxpayers whose taxes would go up on average $3,500 dollars a year. Paul Romano is in medical sales. He has already figured how much his taxes will go up without a deal in Washington D.C.
"I'm guessing somewhere around $4,000 to $5,000 a year," he told us.
The reason: Bush-era tax cuts are set to expire, which will bring the tax system back to 2001 levels. Also set to lapse are a 2% payroll tax cut. It will all out of our paycheck beginning Jan. 1.
"Be prepared, it may be $75 to a $100 less in terms of your take home," said Joshua Jenson, CPA.
Here's how it breaks down:
Annual income of $20,000 to $30,000: $1,064 average tax increase
Annual income of $40,000 to $50,000: $1,729 average tax increase
Annual income of $50,000 to $75,000: $2,399 average tax increase
Annual income of $75,000 to $100,000: $3,688 average tax increase
Annual income of $100,000 to $200,000: $6,662 average tax increase
But the debate centers around more than just taxes. About $1.2 trillion in federal spending cuts are scheduled to kick in next year. And the country will hit the debt ceiling at the same time.
"There are so many things for them to resolve. It's like you have to clean your room before company comes and you wait until five minutes before you're not going to be able to get it all done. It's just all going to be under the bed," said Jenson.
"These people are going back and forth and now it's coming down to the last day and they're going to make some big deal, but all they're going to do is put a band aid on it and make it to the next year and they're not going to fix anything," said Romano.
After today's meeting with congressional leadership, President Obama said today he is optimistic that a deal can reached in time, at least on the tax issue.