FARMINGTON HILLS, Mich. (WXYZ) - As 2012 comes to a close, there is fiscal uncertainty heading into the new year.
“It’s a great unknown, we don’t know," said Rick Bloom, a financial adviser based in Farmington Hills. "We’re in new territory now.”
If Washington is unable to reach a last-minute deal to avoid the tax increases and program cuts, working Americans will feel it in the pocketbook in 2013.
“You’re going to be paying higher taxes, day one," Bloom said. "Two ways: Tax brackets are going up and two, payroll taxes are also going up."
Which also means the paycheck workers receive will be smaller.
The higher tax bill for the average American will rise more than $3,400, according to the Tax Policy Center.
“It’s a significant number, particularly in this economy where you have people who are struggling," Bloom said. "All of a sudden you take fifty, a hundred dollars a month away from them, it means a lot.”
Bloom suggests there will likely be consequences even if a short-term extension is negotiated. That could include people who count on an income tax refund and typically file their tax return early.
“As opposed to getting their refund first of April, they may not be able to get their return until April," said Bloom.
Middle-class Americans and many seniors could face an additional tax bite from the Alternative Minimum Tax (AMT).
Bloom said he remains hopeful a deal can be reached to avoid the long-term consequences that failed negotiations would have on working Americans and the economy.
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