President Obama presses lawmakers to extend tax cuts for the middle class, but getting Congress onboard could be a challenge this election year. As our Lori Chung reports, the economy will feel the impact whether lawmakers choose to act or not.
UNITED STATES -- Experts say it's hard to know exactly how much each person will pay if the tax cuts aren't extended, given deductions and exemptions and the like, but they say one way or another what lawmakers decide to do with the tax cuts will have a big effect on the economy.
“Right now, our top priority has to be giving middle class families and small businesses the security they deserve," President Obama said.
And President Obama says the way to do that is to extend Bush-era tax cuts, but only for some.
Obama said, "I’m calling on congress to extend the tax cuts for the 98 percent of Americans who make less than $250,000 for another year."
"If we don't do that, then on January, 1st 2013, each of those individuals will experience a significant increase in taxes," said Hugh Johnson, Hugh Johnson Advisors Chairman.
The tax cuts are set to expire at year's end. Financial Expert Hugh Johnson says if that happens ,the middle class will feel the pinch.
Johnson said, "We're talking about thousands of dollars, so yes, will you notice? You bet you'll notice."
In fact, Obama says some families could pay as much as $2,200 more in taxes. Instead, he wants the wealthiest Americans to go back to paying Clinton-era tax rates to help close the nation's deficit. But House republicans are expected to insist on cuts for all earners causing some to worry that a stalemate is ahead.
"If Congress does nothing, they will expire, everybody will have a tax increase next year and on top of that, we'll have some spending cuts that have to come in to play, so we'll really almost be walking off a cliff," said Steven Bouchey, Certified Financial Planner.
Johnson said, “It better be resolved because if it's not resolved, it's bad news for the U.S. economy.”
Some economists warn that another recession could be ahead, depending on how this is handled. In the meantime, President Obama says he's hoping to convince lawmakers to move forward with the cut for the middle class, with plans to revisit cuts for top earners in the future.