Think there’ll be no pain if the U.S. Congress is unable to steer us from falling off the fiscal cliff after New Year’s Day?

Think the debate is just some wonky political sideshow in Washington D.C.?

Think again.

Some experts say if U.S. lawmakers aren’t able to come up with a compromise before year’s end to avoid the mix of mandatory tax hikes and spending cuts that’s known as the fiscal cliff, you’ll soon notice. Among many other things, your take home pay could shrink by as much as 10 percent, reflecting the fiscal cliff tax hikes.

For a U.S. family of four earning $50,000, the loss to increased taxes could amount to $2,948 over the course of 2013, according to a tax policy calculator on the website of the Tax Foundation, a non-partisan tax research organization in Washington D.C.

“I think most people are going to be taken by surprise,” said Kyle Hannon, incoming president of the Greater Elkhart Chamber of Commerce. For those not attuned to the fiscal cliff talk “they’re about to be introduced to it.”

Of course a fix could come sooner rather than later, minimizing the damage to your paycheck. And maybe lawmakers will figure something out lickety split, preventing any damage at all.

There’s a lot of skepticism out there, however, and Marshall Emerson, for one, knows if we fall off the cliff — he’s hoping for a last-minute fix — there will be hurt people.

“I’m OK because I’m single,” without debt, said Emerson, an Elkhart machinist eating a late breakfast Thursday afternoon at the Around the Corner Cafe here. He can weather the impact of a dent in his paycheck, he continued, “but I know there are people out there that are really struggling, and it’s going to hit them a lot.”

‘GOING NOWHERE FAST’

Will McBride, chief economist at the Tax Foundation, is skeptical a quick deal is in the offing. Democratic lawmakers are pushing for some measure of tax hikes to complement spending cuts as part of the package to offset the fiscal cliff measures, Republicans are focusing on spending cuts and the sides have been unable to find middle ground

“My sense is that they’re going nowhere fast,” McBride said in a phone interview. “They’re still very far apart from each other.”

Presuming the gridlock persists, he says workers will notice in their first paycheck next year. Take home pay will likely fall at least 2 percent reflecting elimination of a special two-year-old tax cut implemented to help stimulate the economy. But the reduction could be as big as 10 percent, he estimates, reflecting increased withholding rates for income tax, social security tax and other taxes.

The Tax Foundation estimates that the median-income household in the Elkhart-Goshen area, one that earns $49,723, would lose 5.92 percent of that to tax hikes brought on by the fiscal cliff, or $2,941. Among the 366 largest U.S. urban areas, that’s the 36th biggest percentage bite.

That loss would likely result in reduced consumer spending, Hannon notes, while some businesses are holding off on hiring or expanding, uncertain where the debate’s headed.

The Tax Policy Center in Washington D.C. estimates taxes, overall, would increase by $3,500 per household. The Bipartisan Policy Center, also in the nation’s capital, fears two million U.S. jobs could be lost, helping spark another economic recession.

‘RUDE AWAKENING’

Peter Recchio, an Elkhart County tea party activist who, on Thursday, was helping out at the Hart City Super Center flea market here, doesn’t think most people are paying close attention to the fiscal cliff debate.

Ask Elkhart County residents about it, he quipped, and they’d think you’re talking about Bristol “because it’s the highest ground (in Elkhart County), it’s the only place there could be a cliff.” Thus, they’re in for a “very rude awakening” come January, presuming the cliff isn’t averted, he suspects.

Others browsing in Hart City, though, seemed more optimistic about the possibility lawmakers come up with a solution.

“They have to,” said Dawn Jones a high school teacher from Elkhart. “There’s no other choice and really, they’re not that far apart.”



Going off the cliff: The hit to Elkhart/Goshen

Here’s the sort of hit to expect in the Elkhart-Goshen area if we stumble off the fiscal cliff, by the numbers:

• $49,723: Median household income here, four-person family

• $2,941: total estimated tax hike on 2013 wages versus 2011

• 5.92%: Amount of wages the hike represents

• 36th: Rank of percentage tax hike in Elkhart-Goshen among the 366 largest U.S. urban areas

• $1,000: Amount of hike due to child tax credit increase

• $947: Amount of hike due to expiration of other Bush tax cuts

• $994: Amount of hike due to payroll tax increase.

Source: Tax Foundation