Your paycheck will shrink, despite averting fiscal cliff

Posted at 8:43 PM, Jan 02, 2013
and last updated 2013-01-03 07:32:34-05

RICHMOND, Va. (WTVR) -- While many legislators are celebrating the fact that the income tax will not go up for middle income earners, many are failing to mention how Social Security taxes will go up for all.

Under the deal reached late Tuesday, Social Security taxes will go up two percent. For someone making $30,000 a year that is about $50 a month, for someone who makes $50,000 a year that is about $83 a month.

"We will have to cut back, that's all we can do," Pat Powell, a Richmond resident, told CBS 6.

In terms of income taxes, only those individuals making over $400,000 a year will see some of their income disappear.

Other people affected by the deal reached by Congress and President Obama include companies who deal with defense contracts.

"We are just as uncertain today as we were last week," Marshall Butler, President of Richmond's ARC, said.

Congress voted to delay spending cuts until the end of February.

All in all tax expert Ryan Losi says the middle class came out as the winner, but cautioned about any type of celebration.

"While this is a short term win for the middle class it could mean bigger cuts later down the line," Losi said.